Pay up-front with Scottish Power

1carminestocky

What about hitting the switching sites and seeing if there is a company/tariff that works out 5% cheaper WITHOUT paying them up-front for 12 months?

pattycake

Thank you for your responses.

I am tied to Scottish Power in any case until August as I fixed like a good little moneysaver when told to do so by Martin!

I will have to give the matter a bit more thought.

koru

I got this mailing. It is called Pay In Advance.

I think some good points have already been made. Don't do this if you would save more by switching elsewhere or if you are likely to switch in the next year.

But many people will, nevertheless, likely stay with ScottishPower for a year or more. For them, this seems a good deal, as the discount is equivalent to an effective interest rate of about 10% per annum, which is 3-4 times better than deposit accounts are paying. (Although you pay a year in advance, you would otherwise have paid spread over the year, so ScottishPower are, on average, getting your money 6 months earlier than they would otherwise have it, so you are getting 5% reward for paying 6 months earlier.)

Moreover, you are not taxable on the discount, so it is equivalent to gross interest of 12.5% for a basic rate taxpayer and 16% for a higher rate taxpayer.

You can also pay by cashback credit card and increase the benefit further.

I would add the following cautions:

Although they say you can prepay up to £20,000, I can't see why it would be of benefit to prepay more than a year's consumption in advance, as the discount is the same. You might as well put the money on deposit until the start of each new year, then prepay that year.

They claim an average customer will save £264 in the first year. Can't see how they get that figure, as £264 is 5% of £5,280. I would think the average customer pays about £1000-1500 for their energy each year, so the 5% saving would be £50 to £75.

koru

koru wrote: »

Although they say you can prepay up to £20,000, I can't see why it would be of benefit to prepay more than a year's consumption in advance, as the discount is the same. You might as well put the money on deposit until the start of each new year, then prepay that year.

I think I got this bit wrong. Judging by the T&C, this is a one-off offer, which might not be available next year, so maybe it would be worth prepaying more than a year, if you are fairly sure you would otherwise be paying SP's direct debit rates.

Cardew

koru wrote: »

They claim an average customer will save £264 in the first year. Can't see how they get that figure, as £264 is 5% of £5,280. I would think the average customer pays about £1000-1500 for their energy each year, so the 5% saving would be £50 to £75.

Could it be that the £264 is the total of ALL discounts? i.e. dual fuel, DD, paperless billing and the 5% advance.

koru

Sorry, I have realised that for most people this is a cleverly worded rip off.

The 5% discount is based on their standard monthly direct debit prices, NOT on the rate you are actually paying. If you are currently on a rate that is cheaper than those rates (and most people will be), opting for this deal could mean you are worse off.

For example, I am on a fixed rate tariff from last year. Based on a quick search on EnergyHelpline, if I switched to SP's standard monthly direct debit price I would be paying 15% higher. So, after the 5% discount I would be paying 10% more.

So, in fact, their letter promising me 5% savings is in fact an invitation to pay them 10% higher rates than I would otherwise be paying. Crafty Bas***ds!

koru

Cardew wrote: »

Could it be that the £264 is the total of ALL discounts? i.e. dual fuel, DD, paperless billing and the 5% advance.

You are probably right, but there is no clue about this, even in the small print at the bottom of the flier. They give every indication that this is the saving from Pay In Advance.

brewerdave

I got the mailing also via email. I'm tied to them til the end of August on a fixed price tariff which still appears to be better than anything else currently available..What worried me was that I didn't want to switch away from the current deal (with a fine of £xx for early termination)when I couldn't see what that there was any guarantee on the unit rates they were going to charge me for the utilities against my advanced payment and the rates quoted were worse than I'm currently paying.

samizdat

When I log in to my account with Scottish Power, I get a page up with this offer. However, I am on a Fixed Price tariff and paying a lower price than I would be with this offer. So basically SP are offering to remove the security I have with a fixed price, increase my price, and make me pay for my supply for a whole year just as we are coming into summer.

This is mis-selling and a complete outrage.