MILLIONS of households could save up to £200 a year on their energy bills without needing to turn their boiler flow temperature down.
Households should check which method they use to pay their energy bills because one type is cheaper than the other.
It comes as energy bills for the typical household hit £2,500 after Liz Truss introduced the Energy Price Guarantee (EPG) in her short tenure.
The EPG puts a cap on the wholesale cost of domestic gas and electricity for those on the standard variable tariff.
With this in mind, if you use more energy than the average household – you’ll pay more than £2,500 a year.
And in April the cap will rise to £3,000 a year for the average household – pushing up people’s bills even further.
But households that pay their energy bills by cash, card or cheque will pay even more.
A typical household that doesn’t pay their energy bill by direct debit will spend £2,740 on average over the next year.
That’s why it’s important to set up a direct debit with your energy supplier because it is a cheaper alternative to paying your bills by cash, card or cheque.
According to Martin Lewis and the MoneySavingExpert team, paying by direct debit “is usually about £200 cheaper” than paying by other means.
This means that the average household will save over £240 a year on their energy bills if they pay by direct debit.
But only 56% of households pay their energy bills via direct debit, according to Ofgem.
That means there are around 12.5million homes that use a different payment method.
However, of those, 4million are on prepayment meters and can’t switch to direct debit for their energy bills and they will have to pay higher gas and electricity rates.
How do energy direct debits work?
When you set up a direct debit with your energy supplier, they will be able to automatically draw the money out of your bank account at a chosen date and time.
You can time it to go out every month or every three months, so you need to make sure there’s enough cash in your account at that time.
Otherwise, you could be hit with late payment fees or end up in an unarranged overdraft.
It’s also important to understand that most suppliers offer two main types of direct debits – fixed and variable.
Most energy customers pay a fixed direct debit, which means you pay a fixed amount every month.
Your energy company will work out the cost of your energy for the year ahead and divide this into equal payments.
Most energy firms will use the average amount of gas and electricity used in previous years to calculate your monthly instalments.
With a fixed direct debit you can spread the cost of your energy use without any surprises.
Those on fixed direct debits are more likely to build up credit during the warmer summer months and if you’re in credit but your direct debit has risen substantially this winter it’s worth challenging it.
But some energy companies give customers the option to pay with a variable direct debit.
With a variable direct debit, you can choose to pay a varying amount every month or every quarter, depending on the energy you use.
You’ll pay for the energy you use, this means you’ll likely pay more in the winter and less in the summer.
Some experts argue that this type of direct debit method makes it harder for households to budget in the colder months but if you only want to pay for what you use each month then a variable direct debit may be a safe bet.
How can I switch to paying by direct debit?
If you do decide to switch to direct debit, just get in touch with your supplier for more details.
Make sure you read your electricity and gas meters regularly, so you’re only paying for the energy you use.
You should check your bills when they arrive and compare them to your meter readings.
And if the payments are wrong, ring up your supplier to give them an actual reading.
What energy bill support is available?
As part of the Autumn Statement yesterday, it was revealed millions on benefits and Universal Credit will receive an extra one-off £900.
Eight million households currently get cost of living payments worth up to £650, but eligibility criteria could change under any new rules.
Right now, eligibility is the list of benefits mentioned above.
Pensioners have also started getting a £300 one-off payment.
The current pensioner cost of living payment is being handed out to millions on a low income.
You qualify under the current rules if you normally get the winter fuel payment, but this could change under the new rules.
The £300 cost of living payment is paid on top of the other winter support.
You’ll need to be:
- born on or before 25 September 1956
- have lived in the UK for at least one day during the week of 19 to 25 September 2022 in what is known as the “qualifying week”
Struggling families are eligible for the Warm House Discount to help them tackle the cost of living.
The scheme is where eligible households can get £150 off their electricity bill each winter – but you’ll have to wait until the colder months to get the money off.
Households in England and Wales don’t need to apply to get the cash and they’ll automatically qualify if they are receiving certain benefits.
You can read more about who’s eligible here.
There are also 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:
- British Gas Energy Trust
- Bulb energy fund
- EDF’s energy customer support fund
- E.on’s energy fund
- Npower’s energy fund
- Ovo’s debt and energy assistance
- Scottish Power’s hardship fund
There’s also a one-off fuel voucher from your energy supplier if you’re on a prepayment metre.
