Do you pay for energy by direct debit?
These automatic monthly payments are not only the easiest way to pay your bill on time each month, they can also save you money.
Energy suppliers save their best-value tariffs for customers who pay by direct debit. That means that, no matter how much energy you use, you’ll save on your bills by switching to direct debit.
Why is it cheaper to pay by direct debit?
Energy companies encourage paying by direct debit because it saves them costs on administration and issuing bills. You’re also more likely to pay your bills on time if your payment is automatic.
Suppliers also prefer the fact that direct debits are usually the same year-round. Households use more energy in the winter when there is more need for heating and electric lighting. Energy companies average your usage across the whole year to set their direct debit amount, giving them year-round reliable revenue.
All of these factors mean energy companies reward customers who pay by direct debit with a lower per unit rate. Lower unit rates mean lower bills overall. For more information on how your energy bills are calculated, check out our guide to energy bills.Â
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How much can I save if I pay by direct debit?
Your own saving will depend on your supplier and how much energy you use. As an example, British Gas says that its customers save an average of £130 a year on their bills by switching to direct debit.
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I’ve been told to avoid direct debits. Why?
One of the biggest things you should be aware of when paying by direct debit is that your payment will be based on your previous usage or an estimate of your usage if you have not provided meter readings. If your household has changed, or you’ve made changes to use less energy, your direct debit payment may be too high. Some blogs and columnists advise readers to cancel their direct debits because it might be too high. However, a much simpler solution is to adjust your monthly payment – and you’ll still benefit from the lower rates.
You can use your online account with your supplier to see your current account balance. It’s summer as I’m writing this, so we would expect you to be in credit. You’ll also see what your direct debit payment should be as well based on current usage. Provide an updated meter reading and see if this figure changes. If it does, you’ve reduced your usage enough to lower your monthly payment.
