What are early exit fees and how much are they?

When you sign up with a new energy provider, there are a number of terms and conditions to read through before committing to the new plan. This also applies to the provider that you are looking to leave, as there will be clauses in the contract stating whether there are exit fees, when they apply and how much they are. Not every plan out there will have an early exit fee, but in this article, we are going to explain what they are as well as how much they can cost.

 

So, what is an early exit fee?

An early exit fee is a charge that your energy provider will bill you if you choose to leave the plan early. Early exit fees are more common in fixed-rate plans. Fixed-rate plans are where you pay a set amount each month for a specific amount of time; anything between 12-24 months is the usual timeframe. The benefit of this type of plan is that you do not pay for price influxes in energy as the amount is fixed, but if you choose to switch plans you are liable for a fee.

If you pick a variable rate plan, you will find that early exit fees rarely exist, as you pay for the increase or decrease of energy, and have the flexibility to leave whenever you want. Variable-rate plans should be used especially if you have been in more than one scenario where you have needed to pay an early exit fee, as they can be expensive!

 

So, how much is an early exit fee going to be?

It varies on your energy provider and how far along you are in your contractual agreement. Usually, within the first 14 days of being with a new provider, you can exit without any fees, meaning that if you feel like you have made a mistake with your choice you have a bit of time to get out without being charged. This is also the same towards the end of your contract and can be anything from 30-50 days at the end of your contract where you can exit without being charged.

The time in-between the beginning and end can start from as little as $50 to in excess of $100.  The reason why energy providers put exit fees in place is so they can retain customers and protect themselves if the market suddenly changes and a competitor offers a better rate. Early exit fees are common in every type of contract, from cars, to mortgages and phone bills.

The best thing you can do is check the small print on your contract as well as calling up your provider to explain why you need to exit early. There may be some circumstances where you could get the fee waived by the provider, but each energy supplier will most likely look at things on a case-by-case basis. If you are someone who has been stung by early exit fees before, then it is worth looking into variable plans where you do not need to commit for an extended period of time.

 

 

Author: Claire Stapley
Claire Stapley is ElectricityComparison.com.au's Energy Editor, based in Melbourne Australia. Claire is a founding member of ElectricityComparison.com.au News and Energy Team.