The 4 steps to protect your money NOW as UK faces ‘most expensive winter’ in years with soaring bills and interest rates

BRITS could be facing the most expensive winter since 2022, a leading think tank has warned – so it’s worth preparing now. Energy bills have already soared this year as war in the Middle East has sent oil prices skyrocketing. The energy price cap, which is the maximum amount providers can charge per unit of energy, rose by more than £200 last month. A typical dual-fuel household is now paying an average of £1,862 a year. Sign up for the Money newsletter Thank you! Families may not be feeling the hit so much right now, but many could see their bills rise dramatically as soon as winter approaches. Meanwhile, expectations have risen that the Bank of England could raise interest rates before the end of the year – which would push up mortgage rates. Some lenders have already been hiking their rates, with the average two-year fixed rate now at 5.61%. That’s up from 4.81% for a two year fixed deal at the beginning of January, before the Iran war broke out. William Ellis, a senior economist at the Institute for Public Policy Research (IPPR), said “This means Britain is heading towards what is likely to be its most expensive winter since 2022/23. “Families could be hit twice: first through higher energy bills, and then through higher mortgage repayments if the Bank raises rates later this year.” Most read in Money If you want to protect your finances, here’s what you can do… Fix your energy bill Make sure you’re not paying over the odds for every by fixing your bill now Credit: PA Make sure you’re not paying over the odds for energy by fixing your bill now. Several tariffs are under the energy price cap right now, so it’s worth locking in. The best deal right now is Fuse Energy’s August 2026 Fixed (13m) V4, which is around £156 below the price cap. It’s for 13 months and is available to new dual-fuel or electricity-only customers. You could also look at Outfox Energy’s Fixed Dual Aug26 24M v1 deal, which is £128 below the price cap. It’s fixed for 24 months. Just remember that if you’re on a contract already, you may need to pay an exit fee. These can range from around £50 to £75, which could eat up any savings if you’re not careful. Come off any variable deals Tracker and variable mortgages are known as variable debt Credit: Getty Tracker or standard variable rate mortgages are known as variable debt because the interest rates on them change periodically. It’s not ideal to have variable debt right now as it’s likely the cost of debt will either rise or stay high in the coming months, leaving you paying more. Plus, if you’re on a standard variable rate – whether that’s for your home or energy – you’ll generally pay more than a fixed deal. For example, the average standard variable rate, as of August 1, is 7.13%. Meanwhile, the average five-year fixed residential mortgage rate today is 5.65% You can also get variable deals on the energy for your home. On a variable tariff, how much each unit of gas and electricity will cost you is set by something called the Energy Price Cap. The typical amount a household will pay for their gas and electricity bill if they are sitting on the cap is £1,663 a year. But, as mentioned above, there are several deals on the market that are cheaper than the current price cap. Switch bank accounts It could be worth switching bank accounts to a higher savings rate Credit: Getty It could be worth switching bank accounts for a higher savings rate to make your money work harder for you. And now is a good time to make the move as fixed-rate savings accounts have reached 5% for the first time in two years. Fixed-rate bonds allow you to lock up your cash for a set period of time in exchange for a higher interest rate. Those who don’t need to touch their cash can earn 5% with a three year fixed rate deal from investment provider Investec. If you saved £150 a month for the full three years then you would earn a total of £437 in interest. If you’ll need access to your cash in the next year you can still get a one year bond that has a similar rate. GB Bank is offering a best-buy one year fixed-rate bond which pays 4.92%. Saving £150 a month would give you a return of £50 after a year. Of all the big-name brands, NS&I is offering the best one-year bond, which has a rate of 4.69%. Although some easy-access and regular accounts are offering rates above 5% these are not fixed, so could fall if inflation rates plummet. Check if you’re being underpaid your pension Thousands of pensioners have had their state pension underpaid Credit: Getty Hundreds of thousands of pensioners have been paid thousands of pounds after being underpaid their state pension. But it is estimated that many more could be owed cash. A review by the DWP last year revealed that more than 130,000 people were underpaid on their state pensions While the average amount owed per person was just over £6,000, some individuals received life-changing sums. One widow, after years of pursuing the department, was awarded £23,000. Some of the underpayments go back as far as 1985 and were made due to a combination of old complex state pension rules and IT errors. A broad range of people were affected, but it was mostly women who do not have a full National Insurance record. If you think you might have been underpaid, there is an online tool set up by former pensions minister Steve Webb on behalf of actuarial firm LCP which you can use. Either way, if you are owed underpaid pension payments back, the DWP should contact you to let you know. The DWP has stated that the full resolution of these errors will not be completed until March 2027. In the meantime, pensioners are strongly encouraged to check their status and reach out to the Pension Service if they suspect they have been underpaid. Comment now