Guide to energy payment plans

Paying for gas and electricity is one of life’s unavoidable costs. But what’s the right way to do it? Is it cheaper to pay monthly, quarterly, or by direct debit? Here are the different options.  

Paying for gas and electricity is one of life’s unavoidable costs. But what’s the right way to do it? Is it cheaper to pay monthly, quarterly, or by direct debit? Here are the different options.  

Sofia Hutson
From the Energy team
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Posted 18 OCTOBER 2021

How to pay for your gas and electricity

There are lots of ways to pay your energy bills. Which one works best for you will depend on your circumstances. Here are the options:

Help if you’re struggling to pay energy bills

The recent energy pricing crisis has brought a lot of uncertainty to the UK energy market. Prices have soared, leaving people on variable tariffs facing sharp spikes, while those on fixed tariffs have some time to prepare. As we head into winter, when energy usage begins to naturally rise, this pricing crisis is felt harder.

If you’re finding that you can’t pay your gas and electricity bills, don’t avoid the issue. Your energy supplier is obliged to help you come up with a solution, so give them a call. You can then work with them, to come up with a payment plan you can afford.

Not contacting your energy supplier if you’re struggling to pay your bills could mean they disconnect you or make you install a prepayment meter.

There are grants and schemes that might also be available to you, when it comes to covering the cost of your energy.

Paying by direct debit

Paying by direct debit allows your energy supplier to take regular payments from your bank account. This has a number of advantages, including:

  • Potential discounts of around 7%.
  • You’ll spread the cost of your bills, which can help you budget.
  • The direct debit scheme protects payments, which means you’ll get a refund on any payments made in error.
  • You don’t need to worry about missing payments – each one happens automatically.
  • You can cancel your direct debit at any time.

Are there any disadvantages to paying by direct debit?

Payments are based on an estimate, which means you could end up over, or underpaying, for your energy.

You may also need to pass a credit check before your supplier agrees to let you pay by direct debit.

Types of direct debit

There are different types of direct debit, so you’ll need to consider which works best for you. They are:

  • Fixed monthly direct debit
    Your annual bill is estimated, then divided into 12 equal payments. Good for budgeting purposes, but it could mean you end up over or underpaying.
  • Seasonal direct debits
    This allows you to pay less in summer (when you use less energy) and more in winter, when bills are generally higher.
  • Variable monthly direct debit
    Possibly the most accurate option as your monthly payment is based on how much energy you’ve used. But remember to budget for high-usage months.
  • Quarterly direct debit
    This splits your bill into four payments. It’s often the best value, as energy providers tend to offer a lower rate for quarterly payment.

Other ways to pay your energy bills

You don’t have to pay your bills by direct debit – there are other ways to pay.

Paying when you receive your bill

You can choose to simply pay your bill every quarter, when you receive it. This can be great for house-sharers or students, who are likely to be splitting bills.

When your bill arrives, you can pay it by:

  • Debit or credit card
  • Calling your supplier – most have a 24-hour payment line
  • Phone or online banking
  • Bank or building society
  • Post Office

Using a payment card

If you don’t want to set up a direct debit but still want to know exactly how much you’ll be paying, you can use a gas or electricity payment card. This allows you to make the same payment every month, or fortnight. You’ll need to pay at a PayPoint or Post Office. 

Using a prepayment meter  

A prepayment meter is a pay-as-you-go way of funding your gas and electricity. It involves feeding a meter with tokens, using a key, or topping up online. But it’s one of the most expensive ways of paying for your energy. Prepayment meters are sometimes suggested to help people who have had problems paying their bills and can also be used to help repay debts to energy providers. 

Paying by app 

All the big energy firms have their own apps. These allow you to manage your account and pay bills from your smartphone. You can also use them to submit meter readings, monitor your energy use and call out engineers.  

Making sure your energy bills stay accurate

One way to keep your bills accurate is to fit a smart meter.

They automatically send readings to your supplier, so you don’t have to remember to submit your own. Smart meters also allow you to get a measure of your energy use, so you can adapt your habits to try to save energy.

For those without a smart meter, you can send monthly/quarterly meter readings to your energy supplier by phone, email, or via their app.

What to do if your energy supplier goes bust

If your energy supplier goes bust, the first thing to do is not panic. Ofgem, the UK’s energy regulator has set up protective measures to look after customers. But here’s what you’ll need to do:

  • Take a meter reading – it’s a good idea to take a meter reading as soon as you hear your supplier has gone under. This means you have a record of your energy usage to provide to your next supplier, when they take over.
  • Wait – Ofgem will set you up with a new supplier for you and all other customers of your old supplier. You won’t need to do anything. Once they’ve arranged your new supplier for you, they’ll be in touch.
  • Talk to your new supplier – your new supplier should get in touch with you, after the switch is complete. At first, you’ll be placed on their variable tariff (usually the most expensive), so you’ll want to talk to them about switching to their cheapest tariff, or shop around and find a better deal.

If your energy supplier goes bust, you don’t need to worry about your supply being cut off. Ofgem will arrange the whole thing for you. If you have any other worries, you can find out more about what happens when your energy supplier goes bust here.

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