Some energy suppliers charge a fee for switching away from certain tariffs within a set period of time. These are known as exit charges or exit fees, but are also sometimes referred to as early redemption penalties.
Exit fees were introduced around summer 2008 in a bid to deter people from switching suppliers.
As more and more people looked to reduce their energy costs by switching tariffs or providers, Britain’s energy suppliers decided to apply exit charges to their best energy deals as a way of luring and locking new customers in for a set period of time.
Which energy tariffs come with exit fees?
Exit fees were initially only included with fixed-rate and capped tariffs, but are now often applied to suppliers’ cheapest variable-rate tariffs.
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Most people who are on fixed-rate or capped price plans tend not to worry about exit charges because they know their energy costs won’t increase during the offer period.
However, those who opt for variable-price tariffs are usually more affected as they don’t have the guarantee of fixed or capped prices.
Therefore, the chances of them switching to a better deal and incurring a penalty are higher.
Exit charges can be avoided by simply choosing an energy tariff that doesn’t have them.
But even if you find that the cheapest deal for you does come with an exit fee, it could still be worth going for.
They key is to decide how likely you are to want to switch again within the exit fee period and weigh this up against the money you could save by changing suppliers.
I’m not sure whether my current tariff has an exit fee?
If you are not sure whether your current tariff has exit charges, check the terms and conditions of your contract or call your supplier’s customer helpline.