A lot of people are asking about switching to paying a monthly energy bill instead of having a Direct Debit.
Decided if they try to increase my direct debit to anything I can’t afford I will tell them to cancel my Direct Debit and send me a paper bill. I will give weekly meter readings and pay for my usage AFTER I’ve used it, not a monthly amount ahead as a DD. Power companies hate when they don’t have immediate access to your bank or money it really annoys them as there’s a risk you won’t pay. I will put the money aside and physically pay the bill.
Some people say they don’t have any alternative as they can’t afford a much larger DD. Others want to do this because they need to be in control of what they pay.
If you think the Direct Debit isn’t just sky high because of price increases, but is wrong for some other reason, read this other article: “My energy direct debit isn’t just too high, it’s wrong”.
Can you pay monthly like this?
Yes, you can.
The general main problems with cancelling your DD are that your bills may be slightly higher, your credit score could be harmed and you may have to have a prepayment meter fitted. See Should you cancel your direct debit if you can’t pay your energy bill? for more details.
If you switch to paying monthly instead:
- many suppliers give a small discount for paying by DD, and you will lose this if you cancel the DD;
- if you pay the monthly bills in full, this won’t harm your credit record as you are not getting into arrears;
- your supplier can’t make you have a prepayment meter fitted if you are not in arrears.
A monthly bill will be very high in the winter
The problem with paying for what you use each month is that half of all gas used in homes is burned in just three moneth from January to March.
Direct debits smooth this winter spike over the whole year, so you pay the same all year, not more in the winter and less in the summer.
If you switch to paying monthly for what you use, you will have very large bills in the first three months of the year.
And it’s expected that energy prices will go up by a lot again in January 2023. The price cap is now predicted to rise to an average annual amount of nearly £5,400, which would be a DD of about £450 a month for the “average” household. But if that average household pays “on the monthly bill” then their January bill could easily be £700.
Even if you can take 20% off your energy usage – and many people will find that very hard – you may still be hit with huge unaffordable bills in January to March.
Cancelling the direct debit may feel now like it gives you more control, but it doesn’t solve the underlying problem that the energy prices are too high to manage.
If you carry on paying something when you can’t manage the full monthly bill, think about setting up a standing order so you pay the same every month. Then you are showing you are not wilfully refusing to pay.
“But they are asking for an absurdly high DD!”
Is it too high because the gas and electric prices have gone up such a lot? Or because you think they are basing it on the wrong amount of energy usage?
You can’t complain about the price being too high.
But if you think the calculation of the direct debit amount is wrong, you can challenge that. Not just cancel it, but complain about it. I’m going to write an article on this.
Energy Direct Debits have acquired a bad reputation
Direct debits should be seen as the simple, easy way to pay for energy.
But the poor behaviour of some suppliers over the last few years has made many customers suspicious of DDs. They have seen large credits accumulate and some suppliers make it very hard to get them repaid.
And many people in 2021 saw their supplier go under. It then took a worryingly long time for their credit balance to be transferred.
The big jump in direct debits in April/May this year for people on the variable price cap has reinforced this distrust.
Customers saw their DD jump but their usage was much less than the new amount so what appeared to be large credits have built up. For many people the DD amounts are actually reasonable and the credits are just a sign of how large the winter bills are going to be, not of suppliers being greedy. But this has not been well explained.
Suppliers need to find a simple way of communicating how the DD amount was set.
It should not have been necessary for Ofgem to name energy firms who must improve their Direct Debit setting. And Ofgem and the Insolvency Service must work together to find a way of speeding up the process when a supplier goes into administration, so customer transfers work better.
High energy bill? No useful help from Ofgem
Is your energy DD simply wrong?
Could a Debt Relief order help you?
Fiona says
FYI – British Gas won’t allow Standing Orders. So if you cancel your DD you need to go back to paper billing, which will incur an extra charge.
Sara (Debt Camel) says
Yes energy companies won’t give you a discount for paying by standing order. But they can’t stop you setting one up. Instead of making a transfer of £x every month to the supplier’s account, you set up a STO to that account.
Fiona says
British Gas say they don’t offer standing orders. Where would I find the details to set one up despite what they say? If they simply refuse to give me the details? I don’t understands how I set one up when they say no. I would need their sort code and account number to set up an S/O… which they refuse to give me.
Sara (Debt Camel) says
if you want to pay a paper bill, they normally give you the account to pay.
Allan says
You can pay by debit card when you log into your account.
Fiona says
Again, I must flag up that British Gas make paying monthly very difficult. It’s not as easy as you describe. In addition to my previous comments it should be noted that British Gas will not produce monthly billing unless you clear any debit balance. Legally all Ofgem require them to do is provide quarterly billing. I know this as I pushed a complaintas far as I could and that was the final response I got. So they’ll only give you monthly billing if you clear any debit balance first.
Sara (Debt Camel) says
So you pay on the quarterly bill?
do you have an arrangement in place to repay the arrears?
Kathleen Mason says
I now pay monthly to British Gas. I just look at my bill on line and pay straight away on line. They wanted to put my electric up to 140 per month, since then this has been 55 ish per month. The gas was in credit then went in to debit last month and was 120 but this included three months of standing charge. For some reason they are billing me monthly for electric and 3 monthly for gas. As long as you put the money aside, an easy access saving account will give you a bit of interest and this will give you some towards the extra for paying monthly. I don’t think British Gas can make you have a prepayment meter as long as you are not in arrears but I am not an expert and they have not done this to me and I would challenge them if they did.
Steven H says
I’m worried about energy companies being able to move customers with a smart meter onto prepayment without needing a court order to enter your home. It can be done remotely by them.
A lot of bad advice on social media is encouraging people to cancel their direct debits and refuse to pay, but they are unaware of how easy it is for the energy companies to switch them to a prepayment meter if they have a smart meter installed.
Sara (Debt Camel) says
Switching smart meters to prepayment meters hasn’t generally been a problem in the past, but it is possible and we may see energy companies deciding to do this much more often over the next year – we are entering uncharted waters here but it is certainly something to be aware of. See https://debtcamel.co.uk/cancel-energy-dd-dontpayuk/ where I mention it.
Anyone who can pay their bills and choose not to needs to be aware of what may happen.
But I am not sure how many people that actually is. Million in this country don’t have a few hundred a month spare or large savings. They cannot pay the amounts that will be asked in October. Pointing out the problems with not paying doesn’t make any difference to whether they can afford to.
Ofgem has no useful suggestions for people, see https://debtcamel.co.uk/ofgem-cancel-dd-no-good-alternatives/.
Kathleen Mason says
The problem with paying by DD is that the company asks for too much. They do not, will not ptake in to account any of the help paid by government. They ask for a predicted amount based on what your bill is going to be rather than what it is.
I have been in credit now, ony gas, for over 3 months, money I could have used. Asking for this back, British Gas offered me a cheque, I have no way of getting to a bank, they would not use it to pay my electric bill. I have just received my latest electric bill after switching off all unused sockets and not using my dishwasher and it was just under 70 pounds a month and will not change during the winter as have gas central heating,British Gas wanted 140 per month. You have more control by not paying by DD. The energy companies should not charge more if you do not pay by DD. The reason they do this is because of the massive interest they get for you LENDING them your money in advance of you actually using the energy. It must be millions in interest.
Richard says
British Gas will refund by however you pay. So if you pay by DD or BACS they should refund by BACS to the account you pay from. I was always getting into ridiculous amounts of credit, one of the reasons I stopped paying by DD.
EILEEN Jones says
They wanted to double my DD. I rang them and said I would only pay 100pnds a month. I give them my reading at the end of each month
At the same time I ask if I owe them anything. They owed me 238pounds so I asked for 138pnd to be returned to my bank account. Keeping the 100 for the winter months. So no big Bill’s.
peter says
if you do online banking and have a smart phone you dont need to go to a bank to put a cheque in, all banking companies now give you the option to pay a cheque using your mobile phone
Sara (Debt Camel) says
Many banks do but not all.
Kathleen Mason says
That’s fine unless you are 76 years old and have arthritis in your hands and unsteady hands. My bank do this, have tried several times still have a cheque for refund of something else in my drawer.
I pay them by Debit Card, everybody else refunds your card, why can’t they
Corinne Brown says
Hi, Kathleen I agree. I only just started paying by DD when the energy crisis started with EDF, but my bills have spiralled out of control. I have been sending meter readings every month and getting bills over £1,000 £800 £400 every few months. I cannot pay all this as I am a pensioner on state pension and pension credit. I know I must be in credit but EDF don’t agree, so now I am looking to take legal action because I have not reached a conclusion with them. This has had a terrible effect on my mental health.
Sara (Debt Camel) says
Can I suggest you go to your local Citizens Advice and ask for their help as you think the bills must be wrong.
Kathleen Mason says
If you want to pay your bill monthly you just go on line, look at your bill and there should be a “pay my bill” option and you just pay.
At least that’s what I do with British Gas. Not sure about other accounts. When I cancelled my DD they said “we will bill you monthly” so that’s okay by me.
Richard says
I’m with British Gas for electricity and gas and stopped paying by Direct debits around the time they stopped giving dual fuel discounts. It is slightly more expensive but not very much. Luckily I’m on a fixed tariff since last December until December 2023, which initially had a price jump but I’m glad I chose it now although I know my costs will probably be at least treble when it finishes.
As I receive benefits fortnightly and four weekly (ESA & PIP) my payment dates each month are always different and payments from my bank bounced a lot so I stopped my DD’s and pay by quarterly bills. They also seemed to request more money than I would actually consume in fuel per year. I also had Smart meters installed as I was fed up with estimated bills.
If you can set aside money each month to cover a large bill every 13 weeks, or pay by a payment card weekly, fortnightly, or whenever you want it’s usually a better option for budgeting.
I sincerely hope whomever becomes Prime Minister introduces a Social tariff.
Irene says
I have recieved a Letter from my Power Company saying if we stop our Direct Debit and go to Pay as you go they will charge an Extra £100 a Year on top of our Power Bill this cannot be right..We are Pensioners and I have Terminal Cancer and there’s no way we can afford an extra amount like this,,They also want to raise our Direct Debit to £215 a Month then more when October comes and even more in January,,we only have one Bank account and that’s for our Funerals and daily living we do struggle as have lots of Hospital appointments every Week and Doctors Visits,,we ar also on the State Pension,,So it’s not easy ,,Our Power Company is OVO Power,,Thankyou for any Advice giving on this Greatly Appreciated,,Irene & John
Sara (Debt Camel) says
£100 sounds like a lot to me. I will try to find if this is right.
Can I check if you are getting pension credit? Any disability benefits?
Gillian says
I signed up with British Gas for gas and electricity by Direct Debit thinking that was the amount I would pay and THEY reduced it because I was in credit..it was Summer I had no idea they coul alter my DD without informing me first..which they didn,t..until after they had done it..now they want to put it up..without telling me first..I am seriously thinking of cancelling DD and going to monthly bills
Karen Chaney says
Im with Bulb, and despite them wanting to increase my DD two fold. I contacted them and refused and asked if l can just pay my bill in full when its produced, using my meter readings at the end of each month. They agreed this was possible, so now they get my readings on the lsst day of the month, and the next day I receive an email with the bill attached, and 14 days later they take full payment via Direct Debit. I am in control of my money and not the supplier, and its working out ok to date.
Mary says
Bulb have been great I pay £20.00 direct debit. My two Sons live with me and each week I use the Top Up facility to top up via debit card £40.00 each so Bulb get £80 weekly and DD of £20.00 like this way. Plus send in readings on the 30th get correct bill day after.
Fiona says
I pay monthly by DD. I pay the same amount every month. BG policy is no standing orders. I am billed quarterly. I wanted to change to monthly billing. This is only allowed by BG if you first pay off any deficit. I have no formal arrangement but my DD is presently more than I use so a little of the monthly DD it goes towards the £200 debit balance outstanding on the account. It won’t be clearing it anytime soon tho.
Sara (Debt Camel) says
I think you should talk to your local Citizens Advice who can help you get a payment plan in place and suggest what your options are if you do not want to pay by direct debit.
Steve says
Although paying for your energy over a 12 month period to incorporate the higher usage in a winter sounds good I think it can be counter-intuitive. I used to pay a set amount over 12 months and didnt care about my usage throughout the year because I thought ‘hey who cares, iv’e kind of covered that payment already’.
Now however, I have been paying for actual usage each month. Although my payments will increase in the winter, I have seen a drastic reduction in my usage, and therefore my bill compared to the usage last year. The reason for this is that I am now more aware of usage because I am paying for what I use each month rather than an arbitrary monthly DD. As the winter approaches, I am already looking at ways to cut back on usage which will have a 2 fold benefit. Firstly, my bills will be less and secondly, it’s better for the enviroment.
Granted this is not possible for everyone but I do feel that spreading the payment over the year, doesnt encourage the same level of energy conservation and mindfulness as paying for exactly what you use each month.
Steve says
Just as a note about paying monthly amounts to British Gas. I have been paying an agreed amount for gas and electricity using a payment card which I take to a local Payzone shop every month on the 28th. I have been doing this for 10 years and British Gas have calculated how much I should pay each month to ensure I don’t end up with a large debt every April. In the past if I have been in credit after the 12month cycle ends I have been able to reduce the following 12 payments. Obviously this next 6 months will see a rise but they do agree if their estimate is unaffordable I can pay what I can afford and it is looked at again after 3 months. I am lucky in that my electricity payments are very low because I have solar panels that basically generate all I need in energy for 8 months of the year. I can say that they have been fair and considerate in any past issues I have had.
Ste says
My direct debit has gone up from £175 to £295, starting in December. It won’t let me alter the payment when I log in on the ‘adjust direct debit amount’ section. Is this right? New new bill has been generated today and I’m slightly in credit. Should I cancel DD and ask to pay monthly?
Sara (Debt Camel) says
who is your supplier?
Ste says
British Gas.
I’ve done some calculations using the estimated annual usage they have on my bill to the new unit rate and daily service charge and it’s coming in much lower than they are quoting.
My calculations are showing my DD should be £215 not £295 a month.
Sara (Debt Camel) says
read https://debtcamel.co.uk/energy-dd-is-wrong/ which looks at how to challenge the DD amount if you think it has been calculated incorrectly.
Steve says
British Gas would not let me have a variable direct debit to pay for exactly what I use rather than spreading the cost which I find unbelievable. My only option is to now pay monthly through the app. Paying for what I use really does help me be more energy conscious.
Ste says
How do you know how much you have used monthly? If you submit your meter readings every month do they do you a bill for that month? Or do you work it out yourself from your meter readings? I’m going to ring them this week, if they don’t lower my DD I will cancel it.
Steve says
The app shows me because it’s a smart meter so a few days after the end of the month they send a bill and I pay it through the app. I would guess a very similar process should happen if someone gives monthly meter readings but you’d have to ring and check. Common sense and simplicity are concepts the utility companies don’t possess.
Ronald Lythall says
I am with Eon next and February and am £943 in credit and the will not let me drop my dd to account for this saying i con only drop it by 10%.
I’m thinking of stopping dd and paying monthly
Sara (Debt Camel) says
Read https://debtcamel.co.uk/energy-dd-is-wrong/ which looks at how to challenge a direct debit that you think is set too high.
You could Also ask for some of the credit to be repaid to you.
Kathleen Mason says
I cancelled my DD and so glad. I am still waiting for a smart meter, British Gas seem to have forgotten about me. If I pay by DD I only see my bill every three months on line so have no idea how much I owe unless I ring them up, even though I give them a reading. I go on line and its just not there. If I pay monthly they send me an E Mail to say my bill is ready and how much I owe I then pay that on line within the seven days.
In the meantime, I work out how much I need to ser aside each week to pay the bill.
Mike says
Total discrimination, my mother in her 80s pays monthly bill, has to phone them with reading, as there estimate is always way over, they say its cheaper by dd, explain how it’s cheaper, it’s the same usage, it’s a scandal. Anyone that charges extra for electric or any other bill, because you choose to pay over the counter, should be held accountable, and fined for dis criminating against people’s choice.
Sara (Debt Camel) says
Whether you think it should be legal or not, most suppliers do offer considerable discounts for paying by direct debt – so your mum’s supplier isn’t lying then they say a DD would be cheaper.
Linda Worboys says
I have been with British Gas for a long time in January 23 when I was paying by direct debit they increased my monthly payments took three times the amount I paid I noticed on bank statement as queried it both with b.gas and bank I was advised that a letter to advise increase had been sent but as there was a post strike and it never arrived it was agreed to alter dd but bags would not refund. I asked bank and they refunded. I received a letter from b gas to alter dd from feb than at the end of feb snother increased payment was taken what b.gas did sent copy of the increase letter which I notified them had not been received post strike. This was declined to be paid back by bank and b.gas. Since than zi went to omburseman and cancelled my dd paid by transfer indtrad monthly read meter gave reading received statements some months time he omburseman found by b.gas did not pass on two months of government payments order bags to send letter of apology which up to today still not received plus they were otdrrrf to pay £50 compensation and back date increase for February to instalementd . They explained that my monthly increase was too high brought it down a half although I beleave is still higher than should be. Now b.gas are demanding g I pay for estimated 12 months payment if I want to change back to direct debit . Don’t know why my account is up to date if not they demand I double my monthly amount fixed for 12 months
Wendy Owens says
Wendy says I have been with SSE for many years paying on a budget card each each for gas and electric ,I always been in a very good credit ,I pay this every week through bmy local post office Now the problem bis Ivo has taken over SSE ,I went in the beginning bof Dec 2023 to pay my usual installments on my budget card ,the post mistress said that I cannot use the SSE cards no longer as ovo has cut Ties with SSE the end of November .I havent had eny correspondence from ovo that my budget card will stop ,I was very annoyed at this and still am ,I contacted ovo a couple times ,spoke to different staff and gone through the story ,the first call I made the member of staff said that my card will be with me on the 18th December 2023 ,so I waited ,no card arrived I phoned again went through the story yet again ,the member of staff said that they do not do cards so I think I am basically being lied to ,they mentioned direct debit ,also smart meters ,I do not want these ,I want to continue paying through tge post offices on my budget card ,i am very annoyed at thus ,i also emailed them ti complaints ,had email back saying they do not do buget cards ,i tokd them you should havd informed of this when ovo wasctaken ovef sse ,i am now putting money aside to pay the bill when i gave a meter , reading,buf really thats all they got to do is to issue oug new cards but they wsh they dont do them ,i havd told them if they put me in debt because of this then they will be oaying my energy bills .
Sara (Debt Camel) says
It’s up to OVO what payment methods they will take but it was very unhelpful of them to promise to send you a new budget card if they don’t offer this.
How often do you give meter readings?