Don’t have enough cash to pay your energy bill? Why not stick it on your credit card
If you are sitting at home wrapped in a blanket and shivering because you can’t afford to put the heating on, you may not be alone. As if rising inflation, pay freezes, job cuts and higher VAT weren’t enough, the latest round of energy price hikes have added an average 17.4% to the cost of gas and 10.8% to the cost of electricity, giving an average annual bill of a whopping £1,287, a cost some are being forced to meet with high-interest borrowing like credit cards.
People’s champion, Prime Minister David Cameron is probably arguing on your behalf at this moment at a summit with the country's six major energy suppliers, consumer groups and the industry's watchdog to try and tackle soaring gas and electricity costs.
These price hikes equate to an average increase of £155 a year more for gas and electricity. With many households already struggling to make ends meet each month, this increase will push some over the edge. Recent research from MoneySupermarket found that 71% of people will be forced to turn to their savings, credit cards or overdrafts to cover the costs of rising bills this winter.
Energy companies claim their prices are rising because of rising wholesale costs. Regulator Ofgem, also said companies were making £125 per household in profit, the highest level since at least 2004. The energy suppliers dispute these figures and claim flawed research. Well they would, wouldn’t they.
But how much extra would it cost to pay your bill by credit card? If you have a reasonable credit rating, and are not currently buckling under the weight of existing credit, you might be able to get a 0% purchases credit card- the best of which (according to moneyfacts.co.uk ) offer up to 15 months interest free.
Of course, if you are considering paying your bill on plastic or overdraft, it is far more likely that you won’t be able to get these deals, and are likely to be faced with an average APR of more like 16.9% . If you spread the average bill over 12 months, this would mean you would pay interest of over £120.
So energy companies are up by £125 per household, and credit card companies could be pocketing another £120. Looks like the only ones left out in the cold on this deal are the poor householders…