Pod Insights The Martin Lewis Podcast Big Energy Bill Hikes Coming: Should You Fix Now, Even If You’re Already Fixed? About this episode Martin Lewis brings you everything you need to know about your future energy bills.
Martin offers a live reaction to the Chancellor Rachel Reeves’ statement in the Commons on the cost of living.
Tell Us this week is all about what’s the most bizarre way you’ve secured a discount? Fancy dress, sublime banter, a secret code phrase?
And Mastermind this week is about defaulting on your credit file. Can Adrian earn the elusive hallelujahs?
His Question Time podcast lets you ask Martin absolutely anything and everything (within reason!) – so if you’ve always wanted to know his favourite ice cream flavour, if he’s ever pondered the meaning of life, or have a very complicated question about your personal finances, email it to [email protected] mailto:[email protected] .
Transcript 11,793 words · 7 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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0:39 Martin Lewis? That is simply not true, and I said you're all on the price cap, almost certainly. If you're going to be locking in people, lock in cheaply. You are on the price cap if you're not on a fix or special deal. So when I say price cap, I'm talking to you. We have to be hopeful that at some point this conflict is going to end and things are going to improve, but of course, nobody knows that.
0:58 Martin Lewis? Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. And this is our big topic episode, where each week we lead on one main subject to help you save. Now, usually, most of it comes from my BBC Radio 5 live show with Adrian Charles, but don't worry, there's also lots of bonus money-saving extras just for you lucky, lucky podcast listeners. In today's episode, the assessment period for July's energy price cap closed on Monday, so it's likely next week they will announce it's rising by 13%. And I've been swamped with your questions on that, including, should I fix? Should I ditch my current fix to fix again? What's the point of the price cap?
1:40 Martin Lewis? What happened to the so-called energy bill cut in April? And far more. So I'll do my best to try and answer all of those. We'll also be talking about the problem with scam ads regulation, the Chancellor's cost of living announcements, the strangest things you've ever done for a discount, and I cast Adrian as John McClane in a die-hard money mastermind. Play the theme tune.
2:19 Speaker 03 Martin, I've got to say, you're just popping up everywhere. First you're at the BAFTAs getting your lifetime achievement award, then you pop up on Saturday Night Live. It's like, where's Wally? Where's he gonna come next? Cadley in for Rory McIlroy, appears on the space station or something. Can you just give me some warning so I know when you're coming?
2:40 Martin Lewis? To be honest, I'm normally very careful and I say no to most things out there. I don't do a lot of the quiz shows and game shows out there. So I hope I don't appear on too much. I hope I'm not overexposed. We'll be talking about that when you talk about ways people have got discounts later, to be honest. No, they asked me, and Ayawadi, who is one of the Saturday Night Live casts, has actually been to see my show. She's wonderful and it's filmed in the same studios as my show, so we often come across them. And they've been doing a running gag about me through the whole way through. And so she asked me, would I come on the final show and just be a part of it? It was amazing, actually. If you get the chance, either to go or to appear on it as it's you, but for anyone out there, if you get the chance to go to Saturday Night Live, I've never seen British television
3:24 Martin Lewis? like it. There's 300 staff working on it. The amount of moving parts, the sheer scale of it is so impressive. I mean, I sat in the audience most of the time. I took Laura, my wife, and we sat there. And it was so entertaining. They've got live music going on the whole time between sketches when everything's breaking. It's like going to a party. It was absolutely wonderful. And well done to the investment in that, in a little bit of television and investing in all this young, new talent. And they really are a lot of talent. This is the next generation of British comedy and someone's put some money in it. And we're going to see a lot of these people for a long time, I think.
3:56 Speaker 03 I've got a slight fantasy of you seeing you backstage. Going over Tina Fey's standing charges on her energy bills or something, you know, I think it's just, I just love the
4:09 Martin Lewis? I was on with Louis Theroux and we were having a very nice chat. The interesting thing is, I should tell you, just as I'm doing more insight, is they sent me a script for my thing on the Thursday and then they sent me a totally different script on the Friday. And then you do a rehearsal, I got there about five o'clock, did a rehearsal quickly, I mean, I only had four lines. Did the rehearsal, first line went well, second line wasn't reacted well, an hour later, new script, second line's gone, totally changed the way the thing goes on, five minutes before and I'm now, one more quick change for you, they are writing right up to the minute, it was fascinating.
4:40 Speaker 03 You didn't try and do one of your puns, that was my biggest worry when I saw you come on, I said, no Martin, this isn't the time. This isn't the time for a Martin Lewis pun.
4:48 Martin Lewis? I just think Adrian, I could have lifted the whole thing. I mean, yeah, they've got 84 million views on social, but a couple of my puns could have probably taken them to the 100 million.
4:59 Speaker 03 Scam ads then.
5:01 Martin Lewis? Yeah, from sublime to ridiculous.
5:03 Speaker 03 Talk us through it.
5:04 Martin Lewis? Okay, look, so this week, I on behalf of money saving expert jointly with which have written to the Prime Minister about scam adverts and the flaccid, unregulated, Wild West nature that we have still in this country, even though I've been campaigning on this for a decade. We are still leaving millions of people totally unprotected at the mercy of organised crime and nothing has been done properly by any government. And the thing that really triggered me on this and got my goat and got me really worked up about this again is when we had the horrible issue of AI undressing women without their
5:47 Martin Lewis? permission, which is of course a terrible thing. And there was a lot of the Chancellor, the Prime Minister talking about Grok. He said this line then, he said, talking to Big Tech, if you profit from harm and abuse, you lose the right to self-regulate.
6:05 Martin Lewis? And I sat there going, what? What? For 10 years, these firms have been profiting from harm and abuse in the form of scam adverts. We have raised it at every single occasion. The latest research shows 3.8 billion pounds a year is the profit, the revenue they are making in Europe from publishing scam adverts. I mean, how much more profiting from harm and abuse do you get? Scam adverts, when they steal people's money. People don't just lose their finances, their mental health is at risk. They lose their self-esteem. It can bring on huge bouts of depression. It's absolutely catastrophic and devastating for people. If you profit from harm and abuse, you lose the right to self-regulate. And we're getting statements from the government saying self-regulation on the form of scam ads.
6:50 Martin Lewis? Well, these companies won't self-regulate. Their entire business model is based on what's called frictionless advertising. In other words, anybody can advertise without any checks and barriers or any real checks and barriers. They purport to have some, but they do not work. And the idea is that what that means is they don't do know your customer checks. They don't pre-vet their advertisers. And that's what allows organised criminals to put on these fake, deep fake adverts, get rich quick schemes. Forty-four percent of those that involve well-known faces have me in them. Now, right? Which is one of the reasons I'm so vexed, because every day I get messages from people who've lost money and don't know what to do about it. And, and the government has done nothing. I sued Facebook in 2018.
7:32 Martin Lewis? In 2023, we campaigned successfully to change the fact that scam ads weren't covered by the Online Safety Act. They are covered by the Online Safety Act. But we had to put up with the fact that we were told it would be a couple of years, 2025, before Ofcom even started the consultation on how that would be embedded in UK regulation. Well, we haven't had a consultation. It still hasn't come out. We're being told it'll be later this year. That means it'll be the end of 2027 before anything is done. And even those rules only, only cover the biggest tech firms. They don't cover online gaming. They don't cover network ads that you see at the bottom of newspaper and other sites, and a whole host of other things. And the government, this government, the previous
8:14 Martin Lewis? This government or governments have just allowed this absolutely flaccid regulation because of fear of taking on big tech. Well, there is no moral question here. Making £4 billion a year out of scam adverts that rip people off is an absolute harm. So, as the Prime Minister said, if you profit from harm and abuse, you lose the right to self-regulate. Well, they have lost that right and we need to put something in place to protect people. And that's what the letter was about. But probably not quite as stridently as I just said it.
8:47 Speaker 03 I enjoyed it.
8:48 Martin Lewis? Now, as I was sat there with Adrian at exactly that moment, the Chancellor stood up to make her announcements about the cost of living. So we stopped the programme, had a listen, and then came back to discuss it.
9:00 Speaker 03 What are you reading of what Rachel Reeves, the Chancellor, had to say about the cost of living crisis and the things she's trying to do to help alleviate it a bit?
9:10 Martin Lewis? Well, it's good to see them finally doing a retail offering. This is the type of thing I've been telling them for the last couple of years that they need to be doing, actually things that people can see a manifest benefit from. Some of them, like the British Summer Savings Schemes for consumers at least, are a bit gimmicky. This is the temporary cut in VAT on summer attractions for adults, fairs, theme parks, zoos, museums, adults and children, for just for kids, cinemas, soft play and restaurants from the 25th of June until the end of August or the 1st of September. I mean, look, that will be nice for people. It's a reduction in VAT from 20% to 5%. It will be good for those hospitality industries that are involved in it.
9:50 Martin Lewis? And well, hopefully they won't be taking a little bit of the extra cost out, they'll be passing all that on to consumers, then it's win-win. You've also got the free bus passes in August for kids, children in England. The more meaty ones, though, for me are the confirmation there'll be no rise in fuel duty this year. The big one that I think is going to be undercovered but is actually really important is the increase in the mileage allowance for people who drive as part of their work. This has been frozen at £45 since, I think, 2011.
10:25 Martin Lewis? So the increase from forty five p to fifty five p for the first ten thousand miles that you drive is really important. To explain to people how this works, if you drive as part of your work, and the big sector that's very important on this are care workers who are driving from house to house to house. What this mileage allowance does is this is the amount that your employer can give you to cover your costs and you don't pay tax and national insurance on it. So it doesn't count as like earned money, it's a special allowance. So moving that from forty five p to fifty five p is important. It's also worth noting, even if your employer does not give you the full amount of the mileage
11:05 Martin Lewis? allowance, let's imagine they give you thirty p and the allowance is fifty five p. For amounts that you drive for work, not commuting, not to and from work, this is intra-work travel, intra-day work travel, you can claim that twenty five p per mile back, tax back on it, because you'd have been paid that in your wages, you're having to pay it, you can get the tax back in the difference between what they give you and the full allowance. And if they didn't give you anything, you could claim the full fifty five p back. And similar applies to people who are self-employed for driving in their work. This has long been a complaint I've got, so I think the change from forty five p a mile to fifty five p a mile, backdated to April twenty twenty six, so backdated a couple of
11:48 Martin Lewis? months, is really going to be quite useful for people. It's only for the first ten thousand miles, there's a lower rate after that, I haven't heard anything about that rate being changed. I also haven't heard anything about whether they're changing the rate for people who cycle, because there is an allowance for cycling that you're allowed to claim too. I've just got my team trying to check on that. And a quick note, just to be clear, the mileage allowance is about people who use their own car to drive for work. It is not about people who have company cars.
12:19 Speaker 03 Okay, shall we get on to energy bills? This time next week we'll know what the July energy price cap will be. That comes out on Wednesday. But you sort of know already, don't you?
12:31 Martin Lewis? Yes, so the assessment period for the July energy price cap ended on Monday. So the price cap moves every three months and it is an assessment period. The main changing factor is the underlying wholesale rates for a three-month assessment period and the July one closed on Monday. So we now have those wholesale rates. There can be policy changes on top and that was a big driver of the cut in April was policy changes. They're not likely to be substantial this time, so it's all going to be the changes due to wholesale rates. Now unfortunately, that three-month period coincided with the start of the conflict in
13:12 Martin Lewis? the Middle East and at that point we saw a huge spike in wholesale rates. So they went from about 70 to 80 p right up to the very peak around 1 pound 50. They're currently at 1 pound 20 and that is why there's going to be a big rise in July. The rise is going to be about 13%. Now I say about 13%, it could be 12%, it could be 14%, but it's going to be somewhere in that ballpark unless something radical happens and we've just heard from the Chancellor there is not going to be any intervention in the July price cap. So people are going to see, those people who are on the price cap anyway are going
13:51 Martin Lewis? to see their prices rise by 13% in July and that will last for three months. Now I think what's really important to say here and what's not going to happen, so it's almost like we're doing next week's news this week. What you're going to hear in the news is people talking about a 200 pound rise in the price cap. That is nonsense. That is simply not true and it is done frankly because many of the journalists writing these bulletins do not understand this system. The price cap lasts for three months. To quote a 200 pound a year rise would be foolish because it only lasts for three months and this three- Months is the summer. We use about fifteen percent of our annual energy in the twenty five percent three months in the summer. It's a quarter of the year.
14:36 Martin Lewis? We use fifteen percent of our energy. So for someone whose bills are a hundred and fifty pounds a month, a thirteen percent rise in the price cap in July equates to roughly thirty to forty pounds increased cost over that three month period. It is not good, but it is not catastrophic. It is nothing like the Ukraine period. The real question is what happens next? And that's where the problems come in, and that's why the Chancellor has just said she is keeping a watching brief on it. The current predictions for the October price cap are it will go up again four point five percent, and then the January price cap up again naught point six percent. Now, what I need to say is while my prediction or the analyst's prediction for the July
15:21 Martin Lewis? price cap is likely to be pretty accurate, we are only a few days into the assessment period for the October price cap, so there's quite a lot of crystal ball gazing there, and there's even more crystal ball gazing for the January price cap. But what I would say is even if the Middle East conflict ended next week, because of the damage to the infrastructure in the Middle East and the hits on Qatari gas plants, and it's all about natural gas that dictates the primary costs we play, and that's the wholesale rate that really matters, it is very unlikely, unless there is policy intervention, we can see October's price cap coming down to where we are now. It might not go up four point five percent. It might come down a little bit, but I think it would be unlikely for it to come down
16:06 Martin Lewis? to where we are right now. It is more plausible if the Middle East conflict ended soon that we'd see the January price cap come down to where we are now. But I go back to what the analysts, and this is, you know, a whole different group of analysts, and this is an average, their average predictions are it's going up thirteen percent in January, pretty locked in, up four point five percent in October.
16:30 Martin Lewis? As might, you know, less definite, but it's still likely to be higher than it is now and then up 0.6% in January. So that doesn't look good. And why do I say all this? Why is this important? Well, if you are on the price cap, if you're on the price cap, you can fix right now for roughly the level of the current price cap. So if you want to avoid those rises because you are risk averse, you can get off the current price cap. Don't go with your own company because there's very few cheap fixes available. Go on to a whole of market comparison site and you can lock in roughly the current price cap rate for the next year, which is how you prevent the risk of those price rises in winter. Can't say there'll definitely be huge prices in winter, but if you are worried about it,
17:15 Martin Lewis? the risk averse thing to do is to fix.
17:17 Speaker 03 Okay. Do you do some questions then? Catherine wants to know, is it best to fix? Is it a hassle to get away from the present provider? No contract, no debt?
17:25 Martin Lewis? Okay. So, I mean, I think we should probably do before we get into that, who is on the price cap?
17:29 Speaker 03 Okay.
17:30 Martin Lewis? Because this is really, I'll just tell you a little anecdote. I was doing the talk with about 600 people and I asked them this question. So maybe everybody listening at home can answer that in their own head. First question I said is, are you on a fixed tariff? Or a special tariff like an EV tariff or a time of use tariff? And just about 30% of the 600 people put their hands up. My next question was, are you on a price cap tariff? About five people put their hands up. So we've had 200 put their hands up for fix or special tariffs. Five put their hands up for the price cap and everybody else's hands went down. So I said, and now put your hand up if you haven't put your hand up.
18:14 Martin Lewis? And all the rest of the hands went up. And I said, you're all on the price cap, almost certainly. And the big problem with this narrative is I talk about the price cap and the price cap is the term, but people haven't got a clear fit on it. So let me make this really plain. I'm talking to you when I say the price cap. If you are not on a fix or a special deal like an EV tariff or a time of use tariff. If you've not done anything to choose your energy tariff in probably over a year, maybe over two years, you're on the price cap. The price cap is your firm's standard variable tariff, the default tariff, the tariff you move to when a special deal ends, the tariff you're on if you haven't chosen to do anything. The price cap is dictated by Ofgem, the regulator.
18:55 Martin Lewis? It sets the maximum unit rates and standing charges those firms can charge on those standard variable tariffs only. Fixes can be cheaper, standard variable, well, they can be cheaper, it's a cap, but almost every company charges at or within a quid or two of the price cap. The only exception being Home Energy, which is a slightly different version. Its standard tariff is substantially cheaper than the price cap and that's how it operates. But all the rest, all the big names, you are on the price cap if you're not on a fix or special deal. So when I say price cap, I'm talking to you.
19:28 Speaker 03 Is it a hassle to get away from your present provider? It said no contract, no debt, she says.
19:33 Martin Lewis? No, I mean, you've got no contract, no debt, it's absolutely easy. You switch provider, it's a, it's new provider led, they will switch you across. Any credit you owed by your old provider, once your final meter readings are in, will be paid to you and you'll now have the new provider and it will provide your service. And absolutely, you need to go onto a comparison site. Now, I would suggest you go onto a comparison site that is whole of market by default. Unfortunately, there's only one main one and I'm not allowed to make, name it, so you can probably have a guess of what it is. If you're going onto another comparison site, the most important thing I can suggest you do right now, most comparison sites hide tariffs that don't pay them. So you will not be doing whole of market and most of the cheapest fixes right now don't pay comparison sites.
20:15 Martin Lewis? So if you do a comparison on most comparison sites, you will be missing the cheapest deals. If you're on those sites, what you need to do is scroll down to the bottom or it might be in the left-hand menu and there'll be somewhere relatively small, it will say, "Show all tariffs." You want to tick "Show all tariffs." They're not shouting about the fact you can show all tariffs, but there'll be a tick somewhere to show all tariffs. So if you're not on the one that's whole of market by default, if you tick "Show all tariffs," you will then see a whole of market comparison and you absolutely need that at the moment. It takes you five minutes. These days, comparison sites know your usage. You'll then move across. For most people, this is pretty swift and easy.
20:54 Speaker 03 Okay, Nick, I have the offer of a fixed or a cap tracker, both for a year. The capped has a lower monthly direct debit, but should I not go with it?
21:04 Martin Lewis? Ignore monthly direct debits. Please ignore monthly direct debits when you're comparing. There are two totally separate things that indicate what you pay on energy bills. The most important is the rate. What is the standing charge, the daily charge? What is the unit rate, the amount you pay for each unit, each kilowatt hour of gas and electricity you use? The, they are what dictate the total amount you pay. Your monthly direct debit is based upon both the rates you'll pay, but also that firm's estimate of how much you will use. So a firm may be charging you a higher direct debit because it's estimating you're using more, even though its rates are lower. That is the firm that you will pay less to in total.
21:50 Martin Lewis? That is the firm that is cheapest. You just need to go to it and say, you're overestimating my direct debit. I'd like a lower direct debit. You cannot compare on the direct debit that two firms give you, because that's just about their estimating process. And you can always get them, or you have a right under section 27 of the Gas and Electricity License Code, to get them a fair direct debit. So if the direct debit's too high because I've overestimated, you can bring it down. But you're comparing on the unit rates and the standing charges, not on the monthly direct debit. That's a red herring.
22:21 Speaker 03 Okay, well, two questions kind of the same. One, forgive my ignorance, but yesterday the government said a £117 saving. If it's a 13% rise, how is there a saving? And then Brian says with the increase predicted of 13%, will that be 13% from the government tariff levy in April? Or will that be lifted to previous tariff levels, then add 13% on top of it?
22:43 Martin Lewis? Well, this goes back very much to what Rachel Reeves just said in her statement. She talked about we took £150 off energy bills. Which is quite an interesting figure when you do this all the time. So the £150 off energy bills is an average figure that was taken off. Now, that was done by taking one element, the eco scheme, off most people's energy bills because that's being gone, and taking the renewable obligation off energy bills and paying for it by general taxation instead. And that cuts 7% to 9% off energy bills, keteris paribus, to use the economics term, all other things remaining equal. So for those people who are on fixes in April, you will have seen roughly, on average, a
23:27 Martin Lewis? £150 reduction. But of course, £150 is nonsense because this reduction was on the unit rate, the rate you pay for each unit of gas and electricity. Those people who use more would have seen a bigger reduction, those who use less would have seen a smaller reduction. So there's no £150 decrease in energy bills, that's an average. For those who are on the price cap, the underlying energy price cap was actually due to go up. So while it came down by an average £117 on a typical bill, it wasn't £150 because the bill would have gone up otherwise. And that's sort of where we're going now. The second question asked me, is that 13% off the new lower figure? Yes. So we saw the reduction in April.
24:12 Martin Lewis? That reduction was primarily these policy costs I've talked about. And it's worth noting about 60% of our energy bills are policy costs. And in fact, you know, a huge chunk of them are policy costs and admin costs rather than the underlying wholesale rates. So that 7% drop in April is now factored in permanently to bills. The July hike is going to be about 13%. But had the government not made those policy changes in April, it would have been another roughly 7% higher. So not the hike, I need to be careful in my language. The price came down in April, it's going up by 13%. It would have still gone up by 13%, but it would have been off a higher basis because
24:56 Martin Lewis? the April price would have been higher if we hadn't had those changes. So the government Action did reduce energy bills, Keteris Paribus, all other things remaining equal. The problem is, all other things haven't remained equal because there has been a massive conflict in the Middle East that has seen a huge spike in worldwide energy costs, and particularly natural gas costs, which is what is the main underlying driver for what we pay. Does that make sense, Adrian?
25:24 Speaker 03 Yes, it does. We should talk about the typical use, because there's a notional typical use based, which we get every time the new price cap's announced. What does that mean?
25:37 Martin Lewis? Well, it's not a notional from me, because I tend not to use it, but you are quite right. And it's actually very interesting, because the typical use is about to change. So something weird is going to happen next week when the price cap's announced, just to really confuse everyone here. So the typical use is a figure that OFGEM, the regulator, designates as effectively the average use across the country on energy. And they come up with a certain number of gas and a certain number of electricity units that are used, and they then calculate prices based on that. So when they announce the price cap, they reveal this number, the current price cap for someone on direct debit on typical use is £1,641 a year. But that is primarily a nonsense for most people, because you
26:19 Martin Lewis? use more or you use less than that. Very few are actually on exactly that usage. Now, this is the reason for years I've always given the price cap change as a percentage, because the percentage is more useful, even though the percentage does vary depending on whether they shift standing rates or unit charges. The OFGEM are now starting, and in fact have told me they're following my lead on this, which is somewhat flattering, or I wish they'd done it years before, that they're going to start using percentages because of the confusion. But this gets really interesting, Adrian. They are next week going to change and lower the typical use figure. Their estimation is that typical
26:56 Martin Lewis? use has decreased by 7% on electricity and 17% on gas. So the overall average typical use figure from this announcement will be 10% lower than it is now, which actually means... On typical use defined now, converting to new typical use, the number's going to be pretty similar because the price is going up 13%, but the use is going down 10%. Now, they're not going to do that, they're not trying to confuse, they're going to produce two figures, typical use current and what the rise is on that, and new typical use and what the rise is on that. The really interesting nuance here is the fact they're lowering the typical use actually puts people's costs up, which may sound perverse.
27:40 Martin Lewis? I'm going to try and explain it to you, it's complicated. There's about a hundred pounds, roughly a hundred pounds a year of fixed costs that are put on the unit rates we pay within the price cap. And because they're lowering typical use and the estimate of typical use, because they have to allow energy firms to recoup that hundred pounds, to recoup that hundred pounds on lower usage means you need to add more to the bill. So roughly, the fact that people use less now, it's not actually the fact they're lowering typical use, it's the fact that the analysis shows people use less, means we're actually going to see roughly a ten pound a year rise next year because of the change in the typical use figures that are coming in. Typical use has stayed roughly the same for the last three years. So when you hear the announcement next year, I mean, it could, just listen to the percentage
28:24 Martin Lewis? figure, because the typical use figure is going to be really confusing, and they're pretty meaningless to most people, but they do have an impact. Again, complicated, did it make sense?
28:36 Speaker 03 Okay, let's just do a couple of tell-uses. Strangest thing you've ever done for a discount.
28:40 Martin Lewis? You start, I need to switch power.
28:42 Speaker 03 Okay. Lorraine, when she was nineteen, asked the local nightclub she went to five nights a week, five nights a week, blimey, if it would be cheaper just to get the club stamp tattooed on me, to which they said I'd be given free entry for life, so that's what she did. The club's now closed and I'm thirty-six with a club logo tattooed on me, but it was worth it.
29:05 Speaker 03 I need to know what the club's called, really, don't we?
29:07 Martin Lewis? Yeah, you hope it's a small tattoo, don't you?
29:08 Speaker 03 Yeah.
29:09 Martin Lewis? Jenny, I heard a rumour that if you sang to the car park kiosk attendant at the car parks in Disneyland, Florida, they would waive your parking fee. Cue my husband belt out, "Let it go, let it go", that's what I'm doing, as loud as possible as we pulled up. Result: not just parking fee waived, shown straight through to VIP parking literally at the entrance. My 14-year-old son cringed hard, but we thought it was the right result. Well done.
29:35 Speaker 03 Mm-hmm. And just one more I'm gonna give to myself. James once told the lady at the till the barcode for a cream egg, and this was Eshman my brain from years at Woolies, and she was so impressed she gave me a free one.
29:49 Speaker 03 Let's get back into energy bills then. Who got Richie, I think, in Grantham, as it's called?
29:57 Speaker 04 Hello?
29:57 Speaker 03 Richie, what have you got for Martin?
30:00 Speaker 04 Well, I'm in a bit of a conundrum. I'm with British Gas at the moment. My fix rate finishes in August, by which time, we're assuming that the energy price cap's gonna go through the roof. Do I change to another British Gas tariff and lock in a price for a year and get stuck with them? Because obviously I can't go anywhere else without paying the £50 fee for each gas and electric.
30:32 Martin Lewis? So just let me understand, your concern is that when your current fix ends in August, you will be on the price cap and that will be 13% higher than it is right now, correct?
30:44 Speaker 04 Yes, and even trying to find a fixed rate after the price cap goes up is gonna be a lot higher than what I'm paying now.
30:52 Martin Lewis? I'll be honest, I was teasing you then, because I had a feeling the last bit was what you were thinking, and without being rude, the last bit is wrong.
31:00 Speaker 04 Okay.
31:01 Martin Lewis? So let me just take this back to basics, and it is complicated. The energy price cap is based on a time lagged assessment of energy wholesale rates. So the current, the July energy price cap is based on a three month assessment from the middle of February till the middle of May, but it doesn't change until July. So you can see that effectively the price you pay in July is based on prices from five months ago to two months ago, once we get to July. Are you with me?
31:32 Speaker 04 Yes, yeah.
31:33 Martin Lewis? So that's time lagged. The rate at which you can fix is generally based on the current wholesale rates.
31:44 Speaker 04 Okay.
31:44 Martin Lewis? So the reason there are not good wholesale rates today is because the wholesale rate, there are not good fix rates today is because the wholesale rate went up yesterday from 120 to 125. So we've seen firms repricing and making their fixes more expensive on the back. So one is a time lag, your price cap, and one is, one is almost like a spot rate. I mean, it's not exactly a spot rate, but for, for the sake of explanation, the rate you can fix that is based on today's wholesale rates. So the assumption that because the price cap is going up, the rate you can fix that is going up is not correct.
32:24 Speaker 04 Okay.
32:25 Martin Lewis? Right? That is, that's what, and that's where I, I think it's really important to understand this. Now, what the price cap does, the main beneficiary of the price cap, not as it was designed, but the main beneficiary of the price cap in energy prices is that the, the price is slow to rise. Wholesale rates have been up for two months, your energy price cap's been fixed, right? But it's also slow to fall. So if, if the Middle East conflict ends next week and wholesale rates drop, I mean, I doubt they'll drop down to the 70, 80 p a firm they were before this, but that might could drop from the one pound 20 a firm they are now to 90 p a firm. Fix rates could get quite substantially cheaper than they are now. So instead of being currently at the level of the April price cap, they could be, I
33:06 Martin Lewis? mean, I actually did a warning on here four weeks ago saying wholesale rates have just dropped, this could be the chance to get in. And then they were 4% below the current, current price cap and we could be back at that level again. Today's actually a particularly high time to fix. This is the worst it's been for about three, three weeks. So if I had time, which you do. I would not be fixing today. If I were on the price cap and I could get a fix at the level of the current price cap, there's no cost in me fixing today. But for you to fix, A, you'd have to pay an exit penalty if you leave British Gas, although you can fix with a British Gas fix, and British Gas is not offering cheap fixes, it's not one of the cheapest. You can fix with a British Gas fix without an exit penalty, but to go
33:51 Martin Lewis? to a cheap one, you'd have to pay an exit penalty. And B, you would be locking in at today's rate when there is no need to do so. That all sounds great. My problem in what I'm going to tell you is I don't have a crystal ball. No. But I think we are at, if you look, if you look as I do, I mean, I literally, I have to tell you, this is going to be very sad. One of the first things I do when I get up at the morning at the moment is I look at the UK natural gas wholesale rates on my phone, and I look at it at about five o'clock to see where they are. And when you're following it that closely, it feels like right now is even among the crisis relatively high, you know, and it's perfectly possible in two weeks it might be cheaper. Now, look, you've got two strategies. The first is you just close your eyes, enjoy your cheap tariff
34:35 Martin Lewis? while you're on it. You wait until 50 days before that fix is due to end, because in the last 50 days of a fix, they can't charge you early exit penalties, so then you're free to go across the entire market. And you cross your fingers that at that point cheap fixes will be available. Your logic, where you were incorrect, was to say that, you know, because the price cap is up, fixes would be up. That is not true. What I can't say is that they will be cheaper, because I don't know what's going to, you know, you've got, only President Trump has an idea of the uncertainty in the world, and I'm not sure even he knows what's going to be happening going forward. Yeah. And it all depends on him. So I'm going to give you, if you forgive me, I'm going to give you the answer if my mate Richard, who often does and drives me nuts, asked
35:19 Martin Lewis? me this question, what I would give him if I wasn't on air. But with all the caveats that I'm doing that basing on some guessing rather than knowing, is that, you see what I'm saying?
35:30 Speaker 04 Yeah, absolutely.
35:32 Martin Lewis? If you were my mate, rather than a caller who I feel a slightly different responsibility to, I would say, I wouldn't be fixing right now. I would be every couple of weeks checking and seeing whether you could get a cheap fix in the current run-up. If a cheap fix comes in and it looks a good price, I would lock in at that point. I would be getting all those emails that tell you when there are special deals available, you can probably work out that type of thing, you know, in the energy markets. And I wouldn't be rushing. And if you don't find anything until 50 days before your fix ends, which is probably, what, the beginning of July, is it, I think, somewhere?
36:06 Speaker 04 Yeah, yeah.
36:07 Martin Lewis? At that point, then I would start thinking, I just need to lock in at something around the April price cap level or as cheap as I can possibly get. But that may not work, but that's what I would do if I were in that situation.
36:19 Speaker 04 Okay, that's fantastic. That helps me out, yeah.
36:23 Martin Lewis? But I just want, but you understand that if the Middle East got worse, then you might have missed the boat and it might be cheaper to fix now.
36:31 Speaker 04 Yeah, I think it's going to be, you're damned if you do and you're damned if you don't, either way, I think, at the moment.
36:37 Martin Lewis? And therefore to get off a cheap rate, you've got a cheap rate. So to sacrifice a cheap rate to go for a time which is not particularly cheap, I just don't like that concept, but I don't know whether with hindsight it might be the right thing to do.
36:50 Speaker 04 Well, we shall see what happens, I guess. I mean, at the moment, I'm paying such a cheap rate, I don't want to lose that for the two, three months that I've got till August, so I think I'll hold on to that and then reevaluate every couple of weeks and see what comes along.
37:08 Martin Lewis? And that's, I think, I just feel like it would be wrong to jump off that cheap rate now to pay more when, you know, it might be in three weeks' time you could get a fix at 4% less than it is right now. You know, so the now, there is no now for you. The now is for people on the price cap. There's no now if you're on a fix.
37:24 Speaker 04 Excellent.
37:25 Speaker 03 Okay.
37:26 Speaker 04 Thank you very much. I really appreciate that.
37:28 Speaker 03 Thank you very much, Richie. Thanks for coming on.
37:31 Martin Lewis? That was great, Adrian, because I think that's the biggest type of questions we're getting is from people who are on existing fixes. And actually, that discussion, I think, highlights, you know, there's no right answer, but it highlights roughly how you move.
37:44 Speaker 03 Okay, should we do this? Well, you might be similar answers to Mark's questions then with octopus. Fix runs out on the 26th of July. Said to maybe wait a few months rather than fixing that. I think I'd rather fix now because of the price cap, but the flexible octopus is cheaper. God, it's so difficult.
38:01 Martin Lewis? No, look, first of all, there's diff- when was the timing on that?
38:07 Speaker 03 Runs out on 26th of July.
38:10 Martin Lewis? Okay, so that does change things slightly because that, if you count 50 days back from 26th of July, when we're getting to, what, about, what is that, 5th or 6th of June? You know, two weeks' time. I mean, I wouldn't be doing anything right now when you're only two weeks away from getting out of the, going into the period where you can do a fix without any early exit penalties. Unless you happen to be on a fix that has no early exit penalties that a few octopus fixes don't. But, but you're talking about octopus. Octopus, I know its customer service is great. It really is not offering low prices at the moment. If, if you're going to be locking in people, locking cheaply, don't just stick with your existing provider. Go and do a comparison because, I mean, the cheapest fixes are about, are
38:52 Martin Lewis? about the level of the April price cap today. Yesterday, they were 1% cheaper. Three weeks ago, they were 4% cheaper. Today, they're at about that level. Next week, who knows? But if things get better, they could get a bit cheaper. You know, there are some firms who are 5% or 6% more than the April price cap. So you have to be doing whole of market at the moment. This is not a normal time.
39:12 Speaker 03 Mark, sorry, Claire. Claire's fixed with British Gas till September the 26th with £100 each exit fee. Do I stay and wait it out or do I fix? Not sure if the deals BG have now will be cheaper than the rise either.
39:25 Martin Lewis? Well, no one is. But if, if we start to see things improve in the Middle East, I mean, I am hopeful, but can't guarantee you should be able to get a better deal than you can right now at some time before now in September. And I wouldn't be paying big exit, you know, those big exit fees, those. I wouldn't be paying big exit fees to lose my cheap tariff now. You know, we have to be hopeful that at some point this conflict is going to end and things are going to improve. But of course, nobody knows that.
39:51 Speaker 03 Sarah, I've got a choice of a one-year fix or two-year fix, similar prices. What do I do?
39:57 Martin Lewis? There is no assessment on what is going to happen over the next two years. But I think a two-year fix. For a two-year fix at current rates to be a good deal, this Middle East conflict's going to need to have to go on for at least another year. And the UK's not gonna have to not to be able to find other sources of natural gas. I think both of those things, and I am not a geopolitical expert, I think both of those things are unlikely. So the big problem with two-year fixes is the exit penalties, the penalties you have to pay for leaving it before the term. Instead of the fifty or a hundred pounds they are on one-year fixes, can be two hundred pounds, two hundred and fifty quid. Which means you really are locked in for those two years. So I would be very nervous about getting a two-year fix at the moment.
40:41 Martin Lewis? Again, though, my caveat, I don't have a crystal ball.
40:45 Speaker 03 Okay, and.
40:48 Speaker 03 Got a few questions on the cap, don't know whether you want to do these. I've no idea what the cap is supposed to do, says David.
40:54 Martin Lewis? Well, it is an interesting question, I think that.
40:56 Speaker 03 Oh, no, I'm laughing with him, not at him, I promise you. It is an interesting question.
41:00 Martin Lewis? Lots of people think I was behind the energy price cap. I wasn't, and I was actually not that much in favour of it when it came in. Although I think it has been quite useful in the Ukraine crisis and this crisis. The energy price cap was set up to be a backstop tariff for the type of people who never engage in the market. You know, as I always say, what I'd like to call them are the illegitimate victims of competition. If you, Adrian, don't switch tariff, it's your fault. If a ninety-year-old struggling with onset dementia doesn't fix tariff, it's society's fault. And the idea of the price cap was it was a backstop tariff for the people who would never switch. To stop them being hideously ripped off, so they're only just ripped off. I mean, it's there as an absolute cap of what you can pay. We're not meant to be on the standard variable rate. That's not how it was designed.
41:44 Martin Lewis? Then the Ukraine crisis hit, there were no other choice, we were all basically on the price cap. And now there is some choice, which is what we're talking about today, and there are other tariffs too, and I'll go through in more detail some other tariff options in the podcast. And too many people are on the price cap. I mean, the price cap is. Not meant to be a good price, it's meant to be a backstop price, it's a pants price, it's not a competitive price. It's meant to be a protection for those people who can't or don't know how to switch. So if you're on it, you've put yourself voluntarily into that group, you should be engaging in the other options out there. For example, there are a number of tracker tariffs which are basically the price cap with a discount. So if you're going to stick on the price cap, be on the price cap with a discount.
42:27 Martin Lewis? And I will run through all of those in the podcast too. So what is the point of the price cap? It's to protect people who don't know or can't understand or don't know how to switch. So all of those of you who do understand or do know, but don't bother, well, you're putting yourselves in the wrong camp.
42:41 Speaker 03 And how do energy companies manage to keep the price cap lower for fixed tariffs?
42:44 Martin Lewis? Because the price cap doesn't apply to fixed tariffs. The price cap only applies to the standard variable default tariff. If you're on a fix, you're not on the price cap. And what energy firms, as they always have done and did before the price cap, on their standard tariffs, where you have the people who tend not to switch and it will stick and it will just pay what they're told, they charge more. That's how they make their money. They charge more on the default tariffs. Before the price cap, those standard variable tariffs were even higher, but there was a little bit of competition. Now all borrowing home energy price at the price cap. So how do energy companies manage to keep? There's another point. Standard variable tariffs are based on long-term hedging.
43:25 Martin Lewis? When you fix, that literally means, oversimplifying, a company goes into the market, says, what can I buy energy at right now? I'll buy it and I'll sell it to my customers at that price. Oh, plus there was a profit and everything else on top. That's why fixes move every day. Because whereas for the standard variable rate, they are enforced to hedge to make sure that there's energy supply going forward, rather than to buy a certain, you know, when a firm offers a fix, it offers a tranche, it might say, making up numbers. I'm going to buy thirty million pounds worth of energy at that price and then I'm going to sell it at this fixed price until I've sold it all at this fixed price. And then I'll look at what I can buy it for again and I will reprice accordingly, which is why fixed prices move all the time.
44:09 Martin Lewis? So that's why fixes can be at a very different price from the variable price because they're about the current price. Whereas the variable price is based on the price cap that moves only every three months. Now, we've still got more of your energy questions to come, specifically on tariffs that are not fixes and energy credit. We'll be doing that and lots more in the pod only bit at the end. But I can't leave this without putting a mastermind question to our Adrian. Play the theme tune.
44:43 Martin Lewis? Adrian, welcome to Money Mastermind. The score stands that you've got 19 right and 39 wrong in this three option multiple choice quiz, which means sadly you're
44:58 Martin Lewis? no better than random chance. So here's today's question. Adrian is in the supermarket when the lights flicker. The shutters suddenly come down and a panicked shopper grabs his arm and says, "Thank goodness it's you." Adrian's eyes narrow and he thinks, "This is it. It's my diehard moment. I'm trapped in a building surrounded by frightened civilians and only I can save aisle seven." He squares his shoulders, scans the aisles and prepares to whisper, "Yippee-ki-yay!" Can you do that for me? Yippee-ki-yay! Oh, marvellous. Then he realises it's just a stunt to promote a new brand of yoghurt and the person that's grabbed him says, "You do do that podcast with Martin, don't you?
45:41 Martin Lewis? Does missing a payment mean I get a default on my credit file? So Adrian, are you John McClane or John McClulus? Which of these would you answer? What could normally trigger a default on someone's credit file? I quite like the new film themes I'm doing at the moment. A fault on the credit file. Yeah, what could a default? A default. A default on someone's credit file. Is it A, being over a week late on a payment? B, missing three payments in a row? C, missing three payments in a row then failing to put things right after being warned?
46:16 Martin Lewis? So what causes a default? Being over a week late?
46:19 Speaker 03 A default? Well, how do you define default?
46:21 Martin Lewis? That's literally what the question I'm asking you is.
46:24 Speaker 03 No, but default?
46:25 Martin Lewis? It is a thing called a default on your credit file.
46:28 Speaker 03 Right, okay.
46:28 Martin Lewis? It's a specific thing.
46:29 Speaker 03 It's a black mark?
46:30 Martin Lewis? It's a specific type of black mark called a default.
46:34 Speaker 03 Okay.
46:34 Martin Lewis? So is it being over a week late on payments? Missing three payments in a row? Or missing three payments in a row? Then failing to put things right after being warned?
46:43 Speaker 03 I think it's, um, I think it's B. Three, missing three payments in a row.
46:49 Martin Lewis? So are you prepared to lock in on B?
46:51 Speaker 03 Yes.
46:52 Martin Lewis? Play that tension, play the tension music. Okay. So first of all, I have to say, Adrian, a default is the most serious type of flaw you can have on your credit file before we get to county court judgments. I'm afraid to say it's not being over a week late on a payment. That won't cause a default. In fact, I'm quite happy about that. So it is missing three payments in a row. But do they have to contact you first? Yes, you got it wrong.
47:20 Martin Lewis? Sorry about that. It's quite important for people to understand this. The default, which is what everyone is scared of, is a very serious thing on your credit file. It will cause you real problems. It is not just a missed payment. It is not just a late payment. It is, they normally have to contact you after several missed payments. I said three in the question. There's no rule of three. It's several missed payments, but that's sort of roughly the level it would be under the Conshomer Credit Act to give you a default notice and time to settle. Though no technical requirement, there's no technical requirement for a default notice, but that's how it will work on your credit files. Late or missed payments go on your file too, but are far less serious. So you really need to avoid a default. And if a default becomes satisfied, if you later pay it or partially pay it, that can
48:05 Martin Lewis? help you, but it's going to remain on your credit file for six years and it is going to be a real problem in you gaining credit. So the definition of a default, and one of those things you really need to watch for, because it can have a catastrophic effect on your ability to get credit, is several missed and reduced payments and you fail to act once they notify you that they are going to be doing a default.
48:28 Martin Lewis? So now it's time for our pod only extras and I'm glad I've got the time this week because you have sent in so many questions on your energy bills. I'm joined by podcast producer Matt. It is a different Matt to normal question time, Matt. It's Matt Lansley. You were last with us, what, two years ago, Matt?
48:44 Speaker 05 It was about that, yeah. It was another lifetime ago, Martin.
48:47 Martin Lewis? We were both very different people, Matt, I agree. So what I want to do, let's try and do this as quickly as possible, bash through these as we can. If you put the questions to me, I'll see what I can do.
48:56 Speaker 05 Absolutely, yes. So as you mentioned on the intro, we're going to mention some other tariffs that aren't fixed. We've had a question in from Sharon who asks, is it cheaper for me to stay on my prepayment meter or change to direct debit? I've had conflicting advice.
49:09 Martin Lewis? Interesting question, Sharon. The answer is it is both cheaper and not cheaper. So if you're on the price cap where the prices are regulated, prepayment is actually cheaper than monthly direct debit by a percent or two. However, there is no competition. So it is very difficult to switch to a cheaper tariff if you're on a prepayment meter. We do occasionally see fixes available for people who are on smart prepayment meters, but we never see fixes available for people who are not on smart prepayment meters. And even so, the choice is far less. So if you're going to stick on the price cap, you stick on prepayment. But if you want to choose from fixes and much more and many different variants of tariffs out there, you are generally best to move to direct debit. And because
49:54 Martin Lewis? those tariffs tend to be cheaper, that means overall, direct debit is cheaper for switchers, prepayment is cheaper for non-switchers. I hope that makes sense.
50:03 Speaker 05 Absolutely. We've got a question here from Jonathan, who says there's a bit of confusion around the trackers that were mentioned in the programme. He says he's a bit confused how they were described as they are good for now, quote unquote, being below the price cap. But what are the longer term projections against fixed rate tariffs where suppliers are offering 12 month plus trackers which remain £100 below the price cap?
50:22 Martin Lewis? Okay, so I think you're talking about, I did a TV show on this the other day, and I think the question's come on the back of that. So let me just run through a few of the trackers that are available. If you are a low user, then both EDF and British Gas offer one-year tracker tariffs that match the price cap but with £50 a year less standing charges. Now, I define these as low-user tariffs because, on my estimate, they're only going to be cheaper generally for people using less than about £100 a month of energy in total. All these trackers, by the way, also have early exit penalties, so you can't just dip in and out, you have to make a decision. You've then got unit-rate trackers, which don't discount the standing charge, they discount the unit rate you pay on gas and electricity.
51:05 Martin Lewis? The cheapest is Outfox the Market, which offers a minimum 5% less on unit rates than the price cap, although it's currently actually around 9% less. You've also got E.ON Next Pledge Tracker, which is 6% off the unit rate, and that's sort of more standard, so you know what you're going to get. Now, your question is, how do they compare? Well, if the price cap rises as it is predicted to rise, you would be better off on a fix. So how do these stack up? Well, clearly, they're both cheaper than being on the price cap, but if we're going to compare them to the cheapest fix, if they're a maximum 9% cheaper than the price cap, as the price cap is going up 13% predicted to in July, then these will be more expensive
51:50 Martin Lewis? from July than the current cheapest fix is available. And as the price cap is predicted to go up a further 4.5% in October, if that were to come true, then these are, again, way more expensive than fixing right now. So I would say these trackers work for those people who want to play the market and are thinking maybe things will get better sooner, but otherwise you would be better on a certainty of a fix. It's slightly different with the standing charge tracker, because that's all about low users who don't pay many unit rates anyway. And finally, one other to mention, there is this rather interesting tariff, the Home Energy Tariff, which is technically a price cap tariff, but it is the one standard variable tariff that doesn't price at the cap. It's 10% cheaper than the price cap.
52:34 Martin Lewis? The problem with that is the only rules or only thing that we know about it is it's less than the price cap. But we don't know how much less, so there is no way to know what it will price in July. I mean, technically, it doesn't have to put its price up in July when the price cap goes up. I'm pretty sure it will, but it might decide to keep the 10% gap. But it's totally variable, so you don't know. But many people do like it, and currently, that is the cheapest tariff on the market, the Home Energy Variable Tariff. So that's sort of what's going on in trackers and discounts. As an aside, Octopus has a tracker tariff, but it isn't a tracker tariff like the other tracker tariffs. Most tracker tariffs track the price cap.
53:13 Martin Lewis? Octopus tracker tariff tracks wholesale rates on a daily basis, so its price moves each day. It can be good, it can be expensive, it's for sophisticated users. I'm not going to go into too much detail, as you didn't ask about that.
53:25 Speaker 05 Next question here from Chris. I'm shortly going to have solar panels fitted, and with Octopus at the moment, I'm fixed for a few months yet. What's the best plan?
53:33 Martin Lewis? It's really complicated. If you're having solar panels fitted, I mean, the very cheapest thing to do is have them fitted by a company who also will supply the solar export guarantee. That's the amount you get paid for giving money to the grid. It's the way to get the very best rates, but they might not be the cheapest place to fit your panels. If you're not doing that, you can get much better rates for the solar export guarantee, how much you get paid for supplying excess energy to the grid. There are providers who will pay you a better solar export guarantee. That's the rate you get paid for exporting excess energy to the grid, if you get your energy tariff with them.
54:16 Martin Lewis? However, on our numbers, it's only worth doing if you're going to be exporting over 10% of your energy. And so that's quite an amount. It means that you've got quite an excess capacity coming from the solar panels. Otherwise, you'd just be better going for the cheapest deals that you can get on the open market with energy and getting the best paying solar export guarantee that you can. There are certainly some good guys available online that you can read on that one.
54:40 Speaker 05 Lovely. Our next question comes in from They Call Him Sid, I'll call him Sid as well.
54:44 Martin Lewis? Hello Sid.
54:46 Speaker 05 They Call Him Sid says, "The standing charges were being reviewed, but no news. My renewal offer on electric has gone up from 40p to around 57p. How is this justified? I might have gotten a good deal last year, but this increase is excessive."
54:59 Martin Lewis? Well, the big jump is because you were on a good deal before. That is the primary reason for the big jump. The standing charges, look, people who listen to this will know I've been ranting about this for years. I think it's a moral hazard. I think standing charges of £300 a year just for having the facility of having gas and electricity is not the right way to operate the system. We were promised it would change in January, it didn't. We were promised something new would come in in April, and then we were told that what would happen, there'd be a trial with big firms of low standing charge tariffs. That still hasn't happened. I've asked Ofgem about it. It said it will announce a bit more in the price cap announcement that's coming next week, so I hope to hear that. They're probably going to start this trial at the end of the summer.
55:43 Martin Lewis? I mean, what they've said to me is that we think that's the best time for this trial to work. No, the best time for the trial to work would have been as soon as possible. I mean, it's taken way too long. So there is no news at the moment. As you've already heard me say, though, there are a couple of tariffs that will lower your standing charges, those tracker tariffs, but they're only worth it for very low users.
55:59 Speaker 05 And last question here, we've got one in from Andrew. I'm two and a half months in credit, so I could technically ask for money back, but is it better just to keep the credit anyway, considering the 13% increase in July and further increases in October going into higher usage between October and March of next year?
56:15 Martin Lewis? So this one is based on that very sexy energy direct debit cycle that I love to talk about. And this is the fact that if you pay energy by monthly direct debit, so you pay roughly a set amount across the year, trying to smooth out the fact that you use more in winter and use less in summer, the way that it works is you use all your credit in the early months of the year, January, February, March, April. You start to use credit or you build up debt, depending on your situation. And the very bottom of the cycle is roughly the beginning of May, so a few weeks ago, but we're very close to that right now. So this is the point of the year where you have the lowest amount of credit. So many people will be a month's worth of direct debits in debt at this point
56:57 Martin Lewis? of the year. That isn't a problem. You might be roughly no credit, no debt. I would personally say, as a rough rule of thumb, That you don't at this point of the year, assuming your direct debit is correct and you've done updated meter readings, we've got us working smart meters and all the data being fed to the company is correct. You don't at this point of the year need to have any more than a month and a half's worth of direct debits in credit. I mean, when I came up with that figure, in normal years, I say one month. This year, because of the price rises coming up, I've made it one and a half months. So two and a half months in credit, and let's just put some numbers on this. Let's say you pay £200 a month, you're £500 in credit.
57:38 Martin Lewis? I would personally say £300 would be fine, that somebody uses £200 a month, and I would be asking for £200 back, because it's better in your pocket than it is in theirs, and they're sitting on £3 billion of our money. So I know you're right to think about prices going up, but I mean, even if you think about it, you don't have to spend the money just because you get it. You could put it in a savings account and earn 4.5% interest on it, and you would be earning the interest rather than them earning the interest. So any more than a month and a half's worth of credit at the moment, I'd be looking to get some cash back, and there are people out there who will be owed, literally, thousands of pounds. I had someone on my telly show the other day who got four grand back once they did this cheque, so it's well worth it.
58:20 Martin Lewis? And with a mention of a big number like that, seems a good place to stop. Thanks, Matt. And that's it for this week. We tend to put out a new episode every Thursday and Monday, which is our Question Time podcast, where you get to ask me absolutely anything and everything, open brackets within reason, close brackets. If you've enjoyed it today, please do tell your friends you've been listening to the Martin Lewis podcast, and why don't you subscribe? And hey, suggest they subscribe as well, then yours and their pockets will be pleased with you. And if you haven't enjoyed it, and you've been listening this long, then I think we need to have a serious discussion about the choices you make in life and why you can't make a decision. If you don't enjoy something, don't do it.
59:05 Martin Lewis? You should have gone earlier. Yes, you. You know who I'm talking to, not the rest of you, you.
59:33 Speaker 06 websites are available. You can get in touch with Martin's podcast production team by emailing [email protected] . The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.
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