Martin Lewis has revealed an easy trick to save £100 on energy bills – but there’s a catch.
During his live ITV show on Tuesday, the British money saving expert, 52, explained that energy company EDF has launched a brand new tariff that could save people £100 on their bills.
The new offer is essentially a discount, with EDF offering standing charges that fluctuate with Ofgem’s price cap.
Instead of imposing a fixed fee on customers, it will follow the price cap which is set by the energy regulator and means that prices will be lower when the price cap is lower.
He explained that the changing price won’t affect the price paid for usage, but will affect standing charges, or the fixed daily charge for having access to gas and electricity.
Martin said: ‘It tracks the price cap. Price cap goes up, it goes up. Price cap goes down, it goes down.
But, he added, there is a catch; these savings will only help those who already have lower bills.
Martin said that for those whose bills work out to £135 or less, the saving would be very helpful because the lower cost of the standing charge would be taken off their bill.
Martin Lewis, 52, revealed the simple trick to save money on energy bills but urged bill payers to hurry on his ITV show on Tuesday
Because energy bills are made up of your energy usage as well as the standing charge, those who use less energy will see standing charges make up a higher proportion of their total energy bill.
This means that the saving will have more of an impact than those who use more energy where the standing charge makes up less of their bill than their usage.
Martin explained that, for those paying less than £100, the deal could be extremely helpful – adding it would have a ‘massive’ impact on bills that are even lower.
He said: ‘If you’re paying £80 a month this is massive because most of your bill is standing charges.’
But he did caution families who have higher bills against transferring to EDF because it might not save them as much – with Martin advising them to check out other options on comparison sites.
‘Mid to high user you’re better off finding a cheap fix via a comparison site,’ he explained.
Martin also revealed the fastest way for Brits to clear any existing credit card debts on his show last week.
He discussed his top tips for reducing debt – even if you don’t have the money to pay it off in full.
The British Money Saving Expert explained that energy company EDF has launched a brand new tariff that could save people £100 on their bills
As well as making sure you don’t worsen your debt – and speaking to friends about not spending more than you need to – Martin advised to protect your credit history by using an eligibility calculator.
Most of all, Martin described the zero per cent balance transfer as a ‘crucial weapon’ when it comes to clearing debt.
By using the zero percent balance to its full potential, Martin explained how you could start to pay off your actual debt, rather than just paying the interest.
‘Let’s imagine you have £2,300 worth of debt,’ Martin told his live studio audience. ‘One on a stale card and one on a rotten card both at relatively high rates of interest.’
If you find yourself in this sticky financial situation, Martin recommended that you apply for a brand new card with a specific balance transfer deal in order to shift the card.
In the example he gave, the new card was 31 months at zero per cent interest with a £2,000 credit limit.
Martin continued: ‘The first thing you should do is look at the most expensive debt, that’s the one growing quickest, the one you want to get rid of, and you say: “Please pay the debt off that one.”
‘That’s what a balance transfer is. The new card pays off the debt on the old card, so you now no longer owe it.’
The Money Expert explains what to do if you cannot afford to clear your Credit or Store card in full
The graphic behind Martin showed money transferring from the new card to the old one, resulting in the debt plummeting to nothing.
‘You now owe £1,400 for the zero per cent for 31 months,’ said Martin. ‘But you’ve got a credit limit of £2,000.
‘In terms of balance transfers, they only let you balance transfer 90 per cent of the credit limit so that is £1,800 in this case.
‘We’ve got £400 left, so you may as well do it again. Pay off the stale card.’
Pointing to the new card with zero per cent interest for 31 months, Martin said: ‘Now you’ve got £1,800 worth of debt here and only £500 worth of debt on the stale card.’
In Martin’s example, the hypothetical person was paying around 24 per cent APR on £2,300 worth of debt, coming to approximately £600 per year.
Now, they are paying zero per cent interest on £1,800 and 24 per cent APR on £500.
He said: ‘That’s £500 of interest saved which means far more of your money is clearing the actual debt rather than just paying the interest and that gets you debt free quicker.’
Martin concluded: ‘That’s why balance transfers are so important.’
