Energy Prices Plunge Millions into Debt
The high cost of energy has meant almost five million UK households are in debt to their suppliers, new research shows.
Consumers now owe on average £126 to their energy provider, the study by uSwitch revealed, with an estimated £624 million collectively owed.
Two years of price cuts has meant the average amount owed to suppliers was down by 4.5 percent last year, but this figure is still 10.5 percent higher than in 2008 when energy rates jumped up.
It is expected that this debt is likely to rise again following the recent price rises taking the average household energy bill to £1,132 a year. Bills today are 38 percent higher than in 2008.
“Despite two years of price cuts almost two in ten households are in debt to energy suppliers – and now prices are going back up again. This is a real concern,” said Ann Robinson, uSwitch director of consumer policy.
“The fact is that consumers were knocked for six by the 41 percent or £334 increase in energy prices in 2008 and have been struggling to find their feet ever since.”
The price cuts of 2009 and 2010 has done little to ease the strain of energy on many households’ budgets, with 38 percent admitting they are more in debt today compared to last year.
Twenty three percent of households in debt intend to pay it off by lump sum, while 42 percent plan to increase their direct debit. A further 22 percent hope the debt will go down naturally over time.
Budget with a Prepaid Card
If you are in debt to your energy supplier and need to increase your direct debit to cover the excess, you may have to budget the rest of you income each month to ensure you do not end up in debt elsewhere.
A prepaid card is a good aid to budgeting – it does not have an overdraft facility so you can only spend the amount you loaded onto it, and there is no bill at the end of the month.