Given the frighteningly high rates of energy bills at the moment, a lot of people are looking for ways to cut prices.
For most people that means pulling out the spare blankets or cutting down on heating bills – but we’ve also seen others taking more extreme measure, including following a dubious piece of advice currently floating around the internet to cancel your direct debit altogether.
There are two versions of this scheme that we’ve heard of. The first, touted by campaigners Don’t Pay UK, says that you should cancel your direct debit and stop paying all together, instead making a complaint to your supplier about the size of the bill. Doing this is essentially a political act, and the campaign is calling on people to ‘strike’ against high costs. The idea is that, if enough people come together and all refuse to pay at once, the energy companies will face serious financial difficulty and therefore be forced to make bills more affordable.
The other, slightly milder advice says that you should cancel your direct debit and pay by an alternative method such as standing order instead. This would mean that you pay the full amount of your bill each month, rather than overpaying to spread the cost over the year.
Are either of these smart ideas?
We have a lot of sympathy for people looking to take political action against rising costs. Unfortunately, it’s a strategy that could land you in a lot of hot water. You need to understand the full implications before making any decision. Some of the potential risks include:
- Being put onto a prepayment meter (usually more expensive than using a standard meter)
- Having your wages garnished for payment (so the money is taken directly from your salary each month, before it hits your bank account)
- Having the debt passed onto a debt collection agency, with the possibility of bailiffs visiting your home.
It’s up to you to decide whether these things are deterrents or not. However the important thing to realise is that joining the Don’t Pay UK campaign is a type of activism rather than a safe way to reduce your costs.
When it comes to cancelling the direct debit but paying through other means, this isn’t dangerous – but it’s still unlikely to be wise. Energy companies frequently offer direct debit discounts, so paying another way could make your bill go up. Although it’s true that direct debits are often set to collect higher payments through the summer months, this is only done to help spread the costs and keep things cheaper during the winter. You can also ask to adjust the amount of your direct debit and have any excess credit refunded to your account.
Finally, there’s the winter rebate to think of. To help with the surging costs, every home will get £400 taken off their energy bills over the tough winter months. For those who continue to pay by direct debit, the reduction should be applied automatically – whereas for others, it may be harder to take advantage of the deal.
Overall, most experts are recommending that customers don’t follow advice to cancel their direct debit. If you do, make sure your clear about the costs and potential consequences.