Home | Accounting | Budgeting
Save on Heating Oil This Winter Should I lock in at a flat rate or buy COD heating oil this winter? What is the distinction? If a user chooses to lock in at a unchanging price they sign a agreement and lock in at a price that is higher than the current market rate. This agreement is typically for an entire calendar year. Why would somebody lock in at a higher rate? The price of oil always fluctuates with the market. If a consumer thinks that the rate of oil will rise over the course of the year than they will lock in at this fixed rate in the hopes that it will be lower than what the price of oil will go to over the course of the year. Another is convenience people like the fact that they simply get a fill up every so often. If you choose to do this be sure of all of the costs. These “lock in plans” usually come with a service contract that tacks on additional fees or require a down payment. What is the downside to the fixed rate? The problem with the “lock in price” is that most consumers do not watch the market closely enough to make an educated guess as to whether or not to lock in with a company at a fixed price. Last year many people in the Philadelphia area locked in at around $4 per gallon thinking oil would really go up in price only to find out that just months later it fell back down to under $2.50 per gallon. Consumers who locked in around Philadelphia and the surrounding counties were desperate to try and get out of their contracts. Always remember that these contracts are for an entire year. What is COD? COD stands for cash on delivery. This is not literal seeing how most people use credit card anymore. This method does not lock anyone in at a rate and allows them to monitor their oil usage on their own and call for a delivery when they decide. What are the advantages? The big plus is not being locked in at a higher rate. If the market goes down you will be able to buy at a lower rate. It also allows a savvy customer to buy when the price is particularly low by plainly watching what the rate is doing on that exact day and not worrying about what it might do in a few months. What are the disadvantages? If the rate should go up more than the “locked in rate” the consumer will be paying more than the lock in contracts. Either decision that you make is a slight gamble. The greatest way to determine what type of service you want this winter is to first determine what type of person you are. If you are serious about saving money and stay on top of your financial plan every month COD is probably the finest for you. If you do not mind possibly paying more for the convenience of not having to keep track of your budget you may want to do a locked in plan.
Article Source: http://www.go-see.info
For more information on heating oil prices please visit our website.
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
