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.

Written by

Dan Tremain

Energy and business energy expert

Last Updated

22 JANUARY 2024

5 min read

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. First up, we'll consider direct debit.

What are the advantages of 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:

Small discounts
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 overpaying, 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

The most common type of direct debit is fixed, but some energy providers offer variable monthly direct debits.

Fixed monthly direct debit
Your annual bill is estimated, then divided into 12 equal payments. Your payment amount will be reviewed by the provider from time to time. If you use more or less energy, or if energy prices change, then the provider may need to adjust your payment.
Variable monthly direct debit
Possibly the most accurate option as your monthly payment will vary, based on how much energy you use. But you’ll need to have a working smart meter or submit meter readings to your provider every month. Your energy bills are likely to be higher in winter and lower in summer.

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 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.

Paying by Fuel Direct

If you’re struggling to pay your energy bills and you’re on certain benefits, you may be able to pay your energy debt directly from your benefits payments instead. This is known as ‘Fuel Direct’.

If you’re eligible for the Fuel Direct scheme, the Department of Work and Pensions will agree for a fixed amount to be deducted from your benefits payments each month and paid directly to your energy supplier.

To qualify for Fuel Direct, you must be receiving one of the following benefits:

Income Support
Income-based Jobseeker’s Allowance
Pension Credit
Income-related Employment and Support Allowance
Universal Credit.

Help if you’re struggling to pay your energy bills

The recent energy pricing crisis has seen prices soar. 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.

Frequently asked questions

Why do my direct debit payments change if I’m on a fixed tariff?

When you’re on a fixed energy tariff, your unit rate and standing charge will stay the same for the length of your contract. But your payments can change depending on how much energy you use.

Can I pay less if my account is in credit?

If you’ve racked up credit on your account over the summer, you can ask your supplier to lower your direct debit. That way you can gradually reduce the credit over the winter months when you use more heating.

What happens to my direct debit if my energy supplier goes bust?

If your energy supplier goes bust, you don’t need to do anything. Your direct debit details will be transferred to your new supplier and your old direct debit will end when your new account is set up.