How to pay utility bills

Some 40% of UK utility-paying customers still pay by cheque, even though it is almost always far cheaper to pay by direct debit. Yes, switching to direct debit does come with strings:  suppliers often set their direct debits high, so that you are always in credit. While you can eventually claim your cash back, you are effectively giving your supplier an interest-free loan to play with on the stock market. Consequently, your money is not in your bank earning you interest or reducing your overdraft.

We would recommend that you look back over your past bills and estimate your usage, then contact your supplier to lower your direct debit so that you are never actually in credit. If, for example, you have underpaid your suppliers £20, it means they are effectively giving you an interest-free loan.

This may take some persistence, as the utilities are wise to the advantage of taking your money up front. The strongest argument you have is that you are in a better position to estimate your future usage than they are.

Of course, you need to budget properly and ensure you have savings enough to pay for any excess you owe when the time comes. So to help do this, submit your meter readings regularly: it can save a lot of worry. Utilities often send out huge, overestimated bills, await the concerned consumer’s revised reading then adjust it downwards having frightened the user into submission.

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