Free TVs, hours of free power, cheap internet, bundled deals and special contract rates: the dizzying array of offers out there can make it difficult to work out what’s the best plan for you.
What looks like a good deal on the surface can actually cost you more in the long term. Here’s a quick guide to the common mistakes to avoid.
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1. Choosing a power company because you’ll get a free appliance
We’ve all seen the ads – sign up to this power plan and get a free TV! Or fridge, or any number of enticing freebies.
Retailers offer freebies for a reason – and it is not out of the kindness of their hearts. Clever retailer marketing teams have found that offering ‘free’ stuff is an effective way of enticing consumers into higher-priced, longer-term contracts.
Being trapped in a long-term contract could end up costing you more than what that free appliance is worth.
You’re better off choosing the cheapest power plan and having the freedom to change again if you find one that’s cheaper down the line.
2. Bundling your power with another service
A ‘bundled’ plan is when one retailer provides multiple services to one household, not just electricity – such as gas, an internet connection and mobile phone services.
The appeal of bundling is the ‘one-stop shop’ convenience of paying only one bill which covers all your household needs. However, bundled plans can cost households more overall.
You might be enticed to sign up by a cheap internet rate but that can then be offset by higher rates for gas and electricity.
Also, these plans generally require users to sign up for a fixed-term contract of one to three years. So you can find yourself stuck in these contracts, paying more overall.
Instead of clumping them all together, split providers and pick the lowest-cost provider for each service.
3. Not making the most of free or cheaper power
Time of use plans give you free or cheaper power at off-peak times, such as late in the evening or on the weekends.
These plans can be great for budget-conscious households that have the ability and motivation to ‘load shift’ – that is, move their electricity consumption to those cheaper or free times of the day.
But this won’t always suit everybody. For example, households with young families can’t wait until 9pm to feed and bathe the kids. And doing a load of washing late at night may not be an option if you just want to go to bed.
4. Thinking you'll be rewarded for your loyalty
It is estimated that around 25% of households have never changed providers! That’s around 500,000 households who are likely paying more than they could be.
Consumers who have been with the same provider for several years are likely paying what we call the ‘loyalty tax’. By being loyal and not regularly shopping around, they are being penalised by paying higher prices than those who switch providers frequently to take advantage of new deals and offers.
5. Forgetting to check you're getting the best price
There’s no such thing as premium power. We’re all using the same stuff so you might as well be paying the best price for it. So many New Zealanders are paying far more than they need to, simply because they’re not regularly checking they’re on the right plan.
Retailers change their prices throughout the year, and competitors are constantly coming up with new offers. Currently, users of our free Powerswitch service are finding they can save around $400 a year on average by switching.
You can also use your Powerswitch price comparisons to try negotiating a better power deal with your existing company.
6. Thinking switching is going to be hard
We get it. Electricity is boring and confusing. And switching might seem scary. But we’re often told by people that it was much easier than they expected.
For 25 years, Consumer has provided Powerswitch – our free and independent electricity and gas price comparison service. If you want to forget the freebies and gimmicks, and just find the cheapest power for you, then visit Powerswitch. It only takes a few minutes and you could save hundreds of dollars each year.
How to find the best power plan
Discover how to pick the best power plan with our simple guide to plan types, cost-saving tips, and everything you need to know as a savvy consumer.
