Avoid debt by capping energy bills

25 July 2008

"Punishing energy price rises" are on their way according to Fool.co.uk, which has urged homeowners to cap bill prices.

The financial website made the comment after Xelector released research claiming utility bills will increase by 15 to 20 per cent by September and a further 20 per cent early in the new year.

However, Fool has said price rises could occur as early as this month and has recommended consumers take action to avoid problems managing their debts in the future.

David Kuo, head of personal finance, said capped-rate deals may look expensive now but may offer good value in the long run as prices are expected to remain high. The longest-term capped deal may be the best bargain, he said.

"However, opting for capped tariffs is more than taking a bet on the direction of energy prices. It is knowing for certain how much your outgoings will be for the term of the deal," Mr Kuo warned.

According to figures from GoCompare, six per cent of people currently spend all of their monthly income on household bills.

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Gregory Pennington is a member of DEMSA whose code of conduct is approved by the Office of Fair Trading.