HOUSEHOLDS are being warned that cancelling their energy bill direct debit could mean they face paying MORE this winter.
Ofgem confirmed an 80% rise in the energy price cap, sending the average household’s yearly bill from £1,971 to £3,549.
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However, those who choose to pay by on receipt of a bill the price cap is going up to £3,764.
This is because energy firms offer customers who pay by direct debit discounts on their bills.
We previously revealed that British Gas offers a 7% discount on bills, while Utilita offers 6% off.
Other firms offer discounts too, check with your supplier to find out how much you could save.
It comes as regulator said some suppliers might start increasing the amount that direct debit customers pay before October.
While a “Don’t Pay” campaign calling on people not to pay their energy bills in October has received the support of more than 100,000 people.
If you don’t pay your bill, there are serious consequences including debt collectors, marks on your credit score, and the risk of being shifted on to a prepayment meter.
But households are being warned not to cancel their direct debits either.
How much extra will you pay?
Those who pay their energy bills by direct debit will see their bills increase by 80% from £1,971 to £3,549.
But people who use standard credit – or pay manually after receiving a bill – will see an increase of £215 to £3,764.
This is a difference of £215 between paying by direct debit and paying manually.
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Richard Neudegg, director of regulation at Uswitch said: “Choosing to cancel your direct debit and paying on receipt instead also will work out to be more expensive.
“You should not stop paying your energy bills without engaging with your supplier, as it can lead to debt that can spiral quickly.
“This could also impact your credit rating, which may have consequences on your future financial choices.”
Some people are considering stopping their automatic monthly payment to give them more control over their outgoings.
But doing so could mean you end up paying more.
How do direct debits work?
When you set up a direct debit for your energy bill, you pay a set monthly amount which is automatically paid from your bank account to your supplier on a set day of the month.
The amount is set by your provider, which will calculate your annual usage and divide this by 12.
This means you pay for more energy than you’re using in the summer, and less than you’re actually using in the winter.
The alternative is to get a bill sent to you each month and pay after you’ve received that.
But those who pay by direct debit will often get a discount, and it could save you hundreds.
The discount is automatic and most suppliers will add a line to your bill to say it has been applied.
British Gas said its customers can save up to 7% on their bill if they choose to pay by direct debit.
On the average annual bill of £1,971 – that’s a saving of £140.
If energy bills go up to £3,554 this winter, as is expected, that could mean a saving of £248.78.
Here is a list of the suppliers we know offer a direct debit discount:
- British Gas – 7%
- Utilita 6%
- Shell – up to £48 per fuel type per year
- Good Energy – £15 per fuel type per year
- Ovo (discount level not known)
- EDF – 6.6%
If you don’t already pay by direct debit, you can easily switch to paying in this way – speak to your provider.
Not all firms offer a discount though, so if you are doing it to save money it’s worth checking first.
Octopus, Bulb and So Energy do not offer a discount for direct debit customers.
Can I get help from my energy supplier?
Energy suppliers do offer support for those who are struggling to pay their bills.
There are plenty of energy grants and schemes open to help you out if you’re struggling.
British Gas has recently confirmed that it’ll pay its most vulnerable customers grants worth £750 to help with sky-high bills.
Ask your supplier what’s on offer and how to apply, or check here:
There’s also a one-off fuel voucher from your energy supplier if you’re on a prepayment metre.
If you’re in debt there are plenty of services you can take advantage of and they offer free and friendly advice on how to manage debt.
Most of them can offer you free guidance and help in person, over the telephone or online.
They can also help you take the next steps if you need a debt management plan (DMP) to tackle your debt or an Individual Voluntary Arrangement (IVA). These are agreements for managing multiple debts.
What help is already available?
From September the second, one million people receiving tax credits will receive the first half of the £650 cost of living payment.
The money will be paid in the same way you usually get your tax credits.
And from September 20, over six million people with disabilities are set to receive £150 to help with the rising cost of living.
From October the first, all UK households are set to receive the £400 energy bills rebate.
The payment will be made up of six discounts between October and March next year.
Households will receive a £66 energy bill discount in October and November and a discount worth £67 in December, January, February and March.
We’ve listed how the leading energy suppliers plan to pay households the discount and are waiting on others to respond.
The way you’ll be paid will depend on how you pay for your energy.
If you’re on a credit meter the discount will come off your bills, but if you’re on a prepayment meter you’ll get a voucher.
Check with your supplier to confirm how you’ll receive the cash.
In November, a £300 one-off “Pensioner Cost of Living Payment” will be paid out to eight million households.
It will be given to those who already get the winter fuel payment – which is worth between £100 and £300 for those over state pension age.
Payments for the £150 Warm Home Discount scheme will likely begin from December.
