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UK energy bills: Why you should pay by direct debit

·Business Reporter, Yahoo Finance UK
·3-min read
Flames come out of a domestic gas ring of an oven in Durham, Britain, September 23, 2021. REUTERS/Lee Smith
UK energy bills: People should take a meter reading on 31 March to ensure the maximum amount of gas and electricity is charged at the current, cheaper rate, rather than the more expensive tariff coming in. Reuters/Lee Smith

UK consumers could be paying more on their energy bills if they opt out of paying by debit debit.

Martin Lewis, the MoneySavingExpert, warned on Wednesday that homeowners will most likely save money by debit debit payments.

He said that people avoid this method to get a feeling of control over how much they are paying.

"If you're on typical usage, the price cap from 1 April, for somebody paying by direct debit, is £1,971 a year," he said.

"If you want to pay by quarterly bills, and that's what most people ditching direct debit tell me they're thinking of doing, then the price cap is £2,100.

"So that means you're paying over 6% more for the same usage than you do by direct debit, because there is a discount allowed for direct debit. If you can cope with the direct debit, it is cheaper to do so".

It came after part of the British Gas website and its app both apparently crashed earlier on Wednesday. Lewis said that people should take a meter reading by 31 March to ensure the maximum amount of gas and electricity is charged at the current, cheaper rate, rather than the more expensive tariff coming in.

Read more: Cost of living crisis: Low-income households set to lose £850 of spare cash

The crash may have happened on the back of large numbers of people trying to submit a meter reading ahead of Friday’s energy price hike.

The website read: “Service temporarily unavailable. We’re really sorry if you can’t access your online account – there are some technical issues we’re trying to resolve as quickly as possible. Please try again later.”

The new energy price cap is set to come into effect on 1 April, soaring 54% higher amid rising oil and gas prices.

Those on default tariffs paying by direct debit will see an increase of £693 ($) from £1,277 to £1,971 per year, on average. Households who use prepay meters will see an increase of £708 from £1,309 to £2,017.

The move, which lasts for six months, will affect 22 million households that are on a default ‘standard variable’ tariff, over which the price cap sets a ceiling

It is the highest since the cap on energy bills was introduced. It also exceeds average bills going back to 2009, according to official data on domestic electricity and gas costs.

Read more: European markets mixed as Germany triggers emergency gas plan

Analysts at Cornwall Insight have also predicted that the price cap will rise to around £2,500 a year for somebody on typical use on 1 October. This marks an increase of around 25%.

Lewis said: “You're better off to stay on the April price cap and then if nothing changes before that, go on to the new October price cap," he said.

"Again, this is my best guess, I do not have certainty or surety here – it is a bit of crystal ball gazing."

He also warned people about giving a false or inflated reading ahead of the rise. He said on Twitter: "Many asking me Q. Can I give a falsely inflated meter reading on 31 March – so I get more at the cheap rate that I use in April? A. That's called fraud I'm afraid."

Anyone who does give a manual reading could be visited by an energy company representative who will ask to see the meter. If the meter reading is different to what you supplied, you could face an unexpected bill.

Most companies tell customers they must use a smart meter to ensure that the correct reading is being used. If you refuse to join a tariff, you could be paying more overall.

Watch: Why are gas prices rising?

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