The cheapest energy tariffs tend to include a compulsory direct debit payment plan. This is because energy suppliers reward customers who make timely payments. Because we all want help to lower our energy bills, we thought it would be useful to write this guide about the pros and cons of paying by direct debit.
Paying energy bills by direct debit has become increasingly popular, this is mainly because customers have become savvier, and in their search for the best tariff have signed up to pay this way. Direct debits also fit into today’s hectic lifestyles, where many of us have not got the time to post cheques or pay by cash.
That said, there are many who are reluctant to set up a direct debit plan because they are worried about being overcharged and not getting their money back if there is a problem. Such doubts are easily overcome, and our guide will help.
What Is A Direct Debit Payment?
A direct debit is when energy suppliers take payment directly from your bank account at an agreed time. This could be monthly, quarterly or variable, depending on your tariff and agreement.
Types Of Direct Debit Payment
| Monthly |
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| Quaterly |
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| Variable |
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The Benefits Of Direct Debit
Other than saving you time and money, direct debit payments have the following advantages:
- Peace of mind that once set up, you do not have to worry about remembering to pay, and by when. This means you are unlikely to incur any late payment fees.
- You are in control of the amount you pay, and also when the money is taken from your account.
- No more writing and posting cheques, or making cash payments at your post office or bank.
- With fixed monthly or quarterly payments, you can spread the cost of your gas and electricity throughout the year.
- Good for planning your finances.
- You are protected by the Direct Debit Scheme – meaning you can cancel your agreement whenever you want with a letter to your bank. If your energy supplier wants to change the amount you pay and when, they need to give you 14 days notice. If you are overcharged, your bank has to give you a full and immediate refund.
Disadvantages Of Direct Debit
Direct debit payments do come with some disadvantages:
- Your supplier will still take money from your account on the agreed date regardless of whether sufficient funds are available. This could result in bank charges.
- With a fixed monthly or quarterly direct debit plan, you will not be paying for only the energy you use. This is because the fixed payment amount is estimated upon your previous energy consumption level.
Why Do The Cheapest Energy Tariffs Come With Direct Debit?
All energy suppliers reward customers who choose to pay by direct debit. This is because it is cheaper for them to process direct debit payments than it is cash or cheques, but the main reason is a direct debit payment is guaranteed. It is in the interest of energy suppliers to receive guaranteed payments where possible, so they incentivize their customers to choose a direct debit payment plan.
How Much Will I save?
This all depends on the energy supplier and tariff you choose. The cheapest gas and electricity tariffs are online, so it is advisable to compare and find the cheapest one for your area and circumstances using a price comparison website like uSwitch.com. Also take a look at our latest best energy tariffs for an up-to-date picture.
Sources:
http://www.uswitch.com/gas-electricity/
http://www.energychoices.co.uk/partner-ns~guk-energychoices.co.uk/pay-your-energy-bills-by-direct-debit.html
http://www.digitalspy.co.uk/forums/showthread.php?t=753436
