What is a fixed rate plan?

When looking at energy plans it is important to ensure that you are picking the best in terms of your living situation, energy usage as well as location and property size. All these variables play an important part in picking a plan that will work best for you. If you are in the process of looking to switch providers, you are in the right place. In this article we are going to go through what a fixed-rate plan is, who benefits from them the most and why you would and would not pick a fixed-rate plan.

So, what is a fixed-rate plan?

Essentially, a fixed-rate plan is a tariff that you pay on a monthly basis for your energy that does not change for the duration of your plan, so no matter how much or how little you use, the amount you pay will be the same. This also means that if your provider increases their prices halfway through your plan, you will not have a fluctuation in price. Fixed-rate plans usually last anything between a year to two years depending on the provider and have an exit fee if you choose to leave early and switch providers. Fixed-rate plans are a great way to keep track of how much you are spending on your bills, as you can budget what your energy will cost you for the whole year in some cases.

Who benefits from fixed-rate plans the most?

Technically, anybody can benefit from a fixed-rate plan. It is less risk and the opportunity to plan your finances in advance, however, we have highlighted three categories that would probably benefit from a fixed-rate plan the most:

  • Families: Busy lifestyles and children can make life a juggling act, and if you and your partner are trying to control energy usage as well as energetic children that may forget to turn lights off, or not turn the taps off, a fixed-rate plan could definitely save you extra dollars.
  • On a budget: If you are looking to save money, or your living costs take up a large chunk of your salary, a fixed-rate plan is much better to ensure you have security with your finances.
  • Shared accommodation: If you are living with a group of people you do not know very well, opting into a fixed-rate plan means that the bill is split equally and there is no debate over who used more energy than the other. It is fair, and less hassle.

So, why would I pick a fixed-rate plan? And why would I not pick a fixed-rate plan?

Pros Cons
Able to budget Exit fees
Not affected by influx in price If prices drop, you will still pay the original price
Variety of suppliers on the market If you use less energy one year you will still pay the same
Security in a contract for a minimum of a year

 

We hope this article has helped and remember to always check a price comparison website for the best deal on your energy.

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.