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Why utility companies want you to pay by Direct Debit

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So I ring British Gas to get the credit back from my electricity account, £30. They then re-calculated my monthly payments and came up with £30 per month, it was previously £24. After a long call … Read More
happy donkey Avatar
8y, 11m agoPosted 8 years, 11 months ago
So I ring British Gas to get the credit back from my electricity account, £30.
They then re-calculated my monthly payments and came up with £30
per month, it was previously £24.
After a long call trying to understand how they work out the monthly
Direct Debit, I did my own calculations.
Ive put it here and I hope it makes sense, I stand to be corrected and if you
can great, as my brain hurts now. I have not included the 4.8% DD discount
but as these figures are for my low usage i.e. jus lil ol me. Im sure others have
more credit.

First Reading 11679
Latest reading 13457

KWH Used 1778

Cost of Electricity £161.91
VAT @ 5% 5 £8.10

Total £170.01

Days So Far at last bill / Cost per Day 224 £0.76
Average per Year 365 £277.02
Average Monthly Payment 12 £23.08
Direct Debit Payment Required £24.00
Planned Monthly Payment £30.00
Over payment per Month £6.00
Over payment per Year £72.00

Over charge £72.00
Customers 16,000,000
Gained by BG £1,152,000,000.00
Interest @ % 5 £57,600,000.00

So if all the utility companies are doing this (and you know they are) imagine the
money being made.
You should all think about getting any credit back and getting the interest yourself.
I will take my £30 back because even at an extra £6 a month payments, it will be
5 months before my £30 runs out. Then I will check and do it again if need be.
Do remember you are building during the summer for the extra use in winter though.

ed: Also they forgot to set up my gas account, haha t**ts, so I've not yet paid in 7 mths.
Now they are giving me a discount because they messed up, YaY
happy donkey Avatar
8y, 11m agoPosted 8 years, 11 months ago
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#1
Direct Debit Payment Required £24.00
Planned Monthly Payment £30.00

Are these your figures or theirs'?

I see what you're saying but you're currently overpaying in the summer and are going to be underpaying in the winter aren't you?

Also you've calculated the interest based on them having that money for the whole year. At best they have it for six months I would say.
#2
After a year on Scottish Power they wanted my monthly direct debit to rise from £60 to £110 even though I was £137 in credit!! I thought *** you, cancelled my direct debit and put my £60 in a saving account instead.
#3
£110 a month???

Wow!
#4
yeah I used to pay npower £160 a month for gas & elec - when I eventually sorted my life out & cancelled it they owed me almost £1000!

I'm more on top of things now :)
#5
I've been with British Gas electricity for 1/2 year in my old address. I don't have gas. They made me do a direct debit of £25 each month. This is way lower than the £100 of electricity that I use each month.

Also, I just moved to another address and they are only charging me £30 direct debit each month.

They don't charge nearly enough for my monthly direct debit. I would assume they undercharge direct debit for everyone?
#6
Slash
I've been with British Gas electricity for 1/2 year in my old address. I don't have gas. They made me do a direct debit of £25 each month. This is way lower than the £100 of electricity that I use each month.

Also, I just moved to another address and they are only charging me £30 direct debit each month.

They don't charge nearly enough for my monthly direct debit. I would assume they undercharge direct debit for everyone?


Probably depends on the readings they have been given. I think they try to average it out throughout the year so that you're paying the right amount so you'll have paid in full by the end of the year.

I don't think there's a conspiracy to overcharge in order to keep the interest which is why I asked where the OP got his figures from. That said they may be overcharging as the current usage is lower as it's summer but more will need to be paid in order for the winter to be paid for without having to adjust the direct debit.

I guess in an ideal world you'd pay by variable direct debit.

At the end of the day it doesn't make much difference anyway as if they didn't do it this way and they were earning money from the interest then the bill would just go up. That's if every company was doing the same sort of thing.
#7
Ya of course. They charged me for the whole amount owed to them for the final bill when I moved out. They said they got a monthly direct debit figure by looking at electricity consumption of households in my community.

So I don't think for one second there is a conspiracy of them trying to make money by overcharging. If there is a conspiracy, they undercharge me each month so when my final bill comes I will have to pay for the most updated rate which would be more since electricity prices keep rising lol.
#8
watch out you dont get a big bill at the end
#9
directdebit for utility companies is stupid

i mean its not like paying the odd £20 quid via direct debit for your sky or mobile bill is it

the bills for this can run into hundreds

shame they all want direct debit
#10
monkeybrains
directdebit for utility companies is stupid

i mean its not like paying the odd £20 quid via direct debit for your sky or mobile bill is it

the bills for this can run into hundreds

shame they all want direct debit


What difference does it make that it's hundreds. Mortgages can be in the thousands but are taken by direct debit.
#11
Benjimoron
What difference does it make that it's hundreds. Mortgages can be in the thousands but are taken by direct debit.


some people may not have the cash in thier account at the time the direct debit is due

where as paying by another method can be done when the money situation is more benefical for the bill payer

but ofcourse this is bad for the companies becuase the payer may take ages to pay
#12
BG tried to change my direct debit from £35 a month to £95 because of their stupid estimations
#13
bumping this up, just checked my gas and am owed £84 which I'm getting back in my account. About half of it will go to pay for winter usage anyway but the other half is mine. And better to be in my account than theirs!

Just checking electricity now.

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