I am thinking of switching to Panda Power, the new electricity provider. It says switching will cut my bills by 18%. What’s the catch? Discusses Bill Tyson
The catch is that it’s a temporary discount. After a year, you will revert to the full price which may be above average. So if you don’t switch, you could end up paying over the odds, indefinitely.
These deals rely on customer inertia. Although most people may intend to switch, the reality is that only a relatively small number of people do so when the discounted period is up.
It should be stressed that electricity prices here are the third highest in Europe – and the highest of all before taxes and levies are tacked on.
However, Panda should at least help bring some welcome competition to the market. Its discounted unit rate of 13.63cent ex VAT (15.47cent including VAT) is the cheapest stand alone rate.
‘When you add the standing charge of €139 and include taxes, an average household will pay €1,051 a year (with Panda), which is very good indeed’ according to the price comparison website www.bonkers.ie
The average annual bill is €1,211, so switching to Panda Power would save €160, for one year at least.
Bonkers.ie also points out that Panda Power has already stirred up competition. Just prior to its announcement, Energia cut its rates and now charges €1,053 a year, on average, just €2 more than Panda Power.
Electric Ireland also offers switchers €30 cash back, while Bord Gáis Energy pays €100, which means both providers beat Panda on price over one year.
There may also be better deals for switching gas and electricity to a dual provider – Panda is only providing electricity.
The prices shown were provided by bonkers.ie and were correct as of June 3, 2015. They are based on best urban plans which may not be available to all customers – and a national average consumption of 5,300 kWh.
What is the difference between a standing order and a direct debit?
You can set up a standing to pay a fixed regular amount from your account. It’s suitable for paying an unchanging amount every month such as rent, loan repayments or regular savings.
A direct debit allows a company such as your electricity provider to take money directly from your bank account. You give them your bank details and they set it up.They can then vary the amount charged as your monthly bill fluctuates.
Standing orders are best from a consumers point of view as you have more control, but direct debits are obviously more suitable for variable bill payments.
Your Best Buys section gives an interest rate of 1.5% on a demand account. But its only 1.2%if you lock your money away for a year. Is that right? What’s the catch with regular savings rates of 4.5%? And do An Posts tax free products pay any better?
As interest rates fall, some drop before others. I would expect rates on demand deposit accounts to drop soon too. The reason they remain higher for longer is perhaps for marketing reasons, as they have a higher profile than other types of deposit.
The catch with regular savings accounts is that you can only salt away €1,000 a month at most, although, even so, they are still attractive.
An Post does pay more – especially as its tax free – but only if you lock your money away for a long time. Here’s what some An Post products are paying now.
A National Solidarity Bond, 25% tax-free over 10 years (AER 2.26%), min. investment, max. €120,000 per individual.
A National Solidarity Bond, 4% tax-free over four years (AER 0.99%) same investment rules apply as with 10-yearbond.
An Post Savings Bond, interest of 2.5% tax-free after three years (AER0.83%).