Five Questions About: Energy tariffs

Raw power: Mark Hix switches off the cookerFive Questions About: Energy tariffs
Simon Read
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Are they going up again?
Not across the board. But those who switched to smaller supplier First Utility are set for a shock in June when prices rise by an average 18.6 per cent.
Crikey, isn’t that huge?
Yes, but to be fair to the small company – which has 180,000 customers – it has had one of the cheapest dual fuel tariffs on offer and the firm has, at least, waited until winter has ended before introducing the rise, unlike the big six which all, coincidentally of course, increased charges at the height of the cold spell.
Which company has the best deal now?
Who knows? Not gas and electricity customers. Four out of five people who believe they are on the cheapest tariff are not, according to research published this week by Co-operative Energy. The confusion costs people up to £180 a year.
So should I check my charges?
Yes. And examine rival deals. Long-term fixed rates are this week’s trend, with Scottish Power launching a deal that lasts until February 2016, costing an average £1,301 a year.
Should I sign up?
Calm down. Look at all offers, not just the latest one. Npower launched a similar deal last week, and others may be around the cormer. And prices may yet fall, especially as pressure on wholesale gas prices has eased.



Credit Card Rewards: Are They Worth it?

Credit card companies sometimes use rewards – things like airline miles, rewards points, and cash-back offers — as a way to attract new customers.   But just how rewarding are these “rewards,” exactly?  Are they worth it?

Well, that depends.  I have mixed feelings about credit cards to begin with.  On one hand, I think credit cards can be useful tools that can help you build up your credit history.  On the other hand, though, I’ve seen how overspending and irresponsible use can lead to financial disaster.
I feel the same way about cards that offer rewards.  While I don’t feel that they are inherently better or worse than regular, run-of-the-mill cards, I do think that they should be used with caution.  If you’re thinking about applying for a rewards card, there are some important things to keep in mind.
Rewards aren’t free.  Your credit card company isn’t giving you airline miles or hotel points out of generosity.  No matter what kind of rewards program you’re participating in, you only earn points one way: By using your credit card.   Let’s say you are enrolled in a program that gives you one air mile for every dollar you spend on your credit card.  That sounds great – until you consider that one ticket costs around 20,000 to 50,000 (or more!) credit card miles.  That’s a pretty darn expensive plane ticket.
Cash-back awards programs don’t give you much cash back.  Everyone loves cash – and what’s not to like about a program that gives you a small percentage of cash back on every purchase you make?  Well, when you consider how much money you’d need to spend to earn any kind of significant award, these types of cards start to look a lot less likeable.  Let’s say you earn 1% cash back on every purchase you make.  On a $250 purchase, you get a whopping $2.50 back.  Spend $2500, and you’d get $25.  You’d be better off paying cash and not paying interest on a $2500 purchase.
Really, the only way that “cash back” programs ever pay off is if you make a ton of purchases on your credit card, which leads to my next point . . .
Rewards cards encourage you to spend more.  This is my biggest problem with rewards cards.  I’ve mentioned before that I’m not strictly opposed to credit cards – if they’re used responsibly.  But programs that reward you for spending don’t exactly make a compelling case for responsible use.  Enough said.
You’ll pay a higher interest rate on rewards cards.  Most rewards-based credit cards come with a slightly higher interest rate than their normal counterparts.  Some rewards cards also charge you an annual fee – you can end up paying anywhere from $20 to $60 or more simply for having the card!
Being debt-free is the best reward.  When it comes to rewards, there’s nothing more rewarding than looking at a credit card statement with a $0 balance.  If you find that you use your rewards card just to earn free stuff, you might want to seriously consider switching to a different type of card and focusing on paying down your balance.  After all, what good is a plane ticket if you can’t afford a vacation to go with it?
Rewards cards – whether they’re giving you plane tickets, gift cards, or a tiny percentage of cash back – are marketing gimmicks, plain and simple.  If you use your credit card responsibly (meaning, you pay it off in full every month, you don’t over spend, etc.), there’s no harm in signing up for one that gives you a little something back.  But just like any other credit card, sometimes the risks outweigh the rewards.