Warning over new 'cheapest' energy deal that comes with a massive catch

A MARKET-LEADING energy deal promises to undercut the autumn price cap – but experts are warning it comes with a massive catch.

Utility Warehouse has launched an energy tariff that's fixed for 12 months, and it's hundreds of pounds cheaper than the average.

Under the deal, the average household will have an annual energy bill of £2,250.

The energy price cap – currently £1,971 – is expected to hit £2,879 in October, so this deal could potentially shave hundreds of pounds off the typical household bill.

Utility Warehouse is a website that lets you take out contracts for mobile phones and broadband, insurances and energy bills.

It offers packaged deals, whereby you just get one monthly bill that wraps up all of the utilities you get through the firm.

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But to qualify for the cheap energy deal, you'll also need to take out two other products with the firm.

That means you'll need to check how your other bills compare to find out if you can really save.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: "Bundled deals can really muddy the waters when you’re trying to shop around and makes it more difficult to work out whether it’s a good deal."

For example, Utility Warehouse's broadband prices start at £21.60 a month.

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Its ultra package delivers average speeds of 35mbps and unlimited data in an 18-month deal.

Its cheapest Sim-only mobile phone contract is a value deal for £12 month, with 5GB of data and unlimited minutes and texts.

When we checked using Uswitch, we spotted a 12-month broadband deal with Now TV offering speeds of 63mbps for slightly more at £22 a month, plus a £5 set up fee.

Vodafone offered speeds of 67mbps with no setup cost in a 24 month deal for £22 a month.

Meanwhile, customers could get 30GB of data in a SIM-only deal with Three Mobile for £9 a month, also with unlimited texts and minutes.

Coles added: "In this case, it’s a cheaper fixed rate energy deal than elsewhere on the market, but the broadband and mobile deals aren’t the most competitive.

"Once you‘ve switched, you’ll get a single overall monthly bill, so unless you check it carefully, it’s easy to forget how much you’re paying for each part of the service and can make it harder to shop around and compare deals in the future."

As well as prices, you need to check the terms of your current contracts.

If you're still in a deal period, you could be hit with a penalty charge for switching early.

On its website, Utility Warehouse said it will guarantee it beats the price cap by up to 5%.

What's going on with energy bills?

Energy bills are a major cause of concern for households at the moment. Soaring wholesale costs and the ongoing crisis in Ukraine are forcing up prices.

The energy price cap (the maximum amount providers can charge per unit of energy) soared by 54% in April, and will rise again in October.

Previously, households have been urged to lock into fixed tariffs which were cheaper than the price cap.

But there are currently no deals on the market which beat the price cap, so it is cheaper to stay on the standard tariff.

Martin Lewis has previously said that some households may still want to fix so they have certainty over their bills, but they should be careful not to overpay.

Some providers are offering better deals to existing customers so it is worth asking your supplier if it has any tariffs available.

The Government has come up with a package of measures to help, including a £400 payment to every household and a further £650 for those on Universal Credit and other benefits.

Meanwhile, many households are doing everything they can to cut their energy use in a bid to bring down their bills.

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