This advice applies to
Direct debit – paying for gas and electricity
If you pay by direct debit, your supplier will take regular payments from your bank account. The amount you pay is based on an estimate of your annual energy consumption, usually divided into twelve equal payments.
This page explains how direct debit works and the benefits and drawbacks of paying this way.
Always check the estimated consumption on your energy bill against the actual consumption shown on your meter.
Report the accurate meter reading to your supplier. This can help ensure your supplier charges you the right amount and reduce the risk of running up large bills.
Check your credit score before applying for a direct debit as failing the credit check may have a negative impact on your credit score.
What to think about
Paying the same amount each month means you could find your account is in credit over the summer. However, this credit is often used to pay for higher energy use over the winter.
You should regularly check your estimated consumption against your actual meter readings, to ensure you are not over-paying or under-paying. Your supplier should review your bills and consumption at least every 15 months, to ensure you are not paying too much or too little.
The main advantages of paying your energy bills by direct debit include:
- it can help you budget as you always know how much you'll have to pay each month
- suppliers often give discounts if you pay monthly by direct debit. Some suppliers may also offer a discount if you pay the actual amount of the bill quarterly by direct debit
- your payments are protected by the direct debit scheme. This means immediate refunds for payment errors and a set notice period for any changes
- you can cancel a direct debit instruction with your bank at any time.
The disadvantages of paying your energy bills by direct debit include:
- your payment may be set too low or too high
- you need to manage your bank account to make sure you have enough funds to pay your bill every month.
If you want to pay by direct debit, contact your supplier. Energy suppliers don't have to offer you the option of paying by direct debit. Some carry out credit checks before they agree. You will need to give your permission for the check. You should check your credit score before applying for a direct debit as failing the credit check may have a negative impact on your credit score.
Protection when you pay by direct debit
Rules set by the gas and electricity industry watchdog Ofgem mean that energy suppliers must:
- set fair direct debits based on the actual amount of gas and electricity you use
- explain clearly how they have calculated your direct debit figure
- refund any credits you have built up when you ask them to, although your supplier can refuse this if they think you might have problems paying the bills in the future
Your payments are covered by the direct debit guarantee. This means you should be told at least ten working days before the money is taken from your account. If you are not told either in writing or when you receive your bill, you can complain and ask for compensation from your bank. Any money taken in error should also be refunded immediately.
If you have any complaints about paying for your energy bills by direct debit, you should contact your supplier.