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Can You Overpay on Your Energy Bills? (How Does Being in Credit Work?)

Find out which method of payment is best in order to make the cost of your energy bills more affordable.

Read Time : 4 mins

Author : NED

When it comes to paying your energy bills, you may be wondering which method of payment is best in order to make the cost more affordable. In this guide, we’re going to be explaining all the different ways you can pay and whether it’s better to be in credit.

How Can I Pay My Energy Bill?

Paying Your Energy Bill By Direct Debit

The most common method of paying your electric bill is to set up a direct debit, meaning payments are automatically taken from your account either monthly or quarterly.

This is a popular option as it means you don’t have to worry about remembering to make payments yourself, so long as you have enough money in your bank account to cover the energy bill.

Monthly Direct Debit

If you decide to pay by direct debit monthly, the payment will be taken from your account around the same time each month. The amount is calculated by your energy provider which estimates your energy usage for a year and divides it across 12 months.

This means the amount you pay each month might not necessarily reflect exactly how much energy you have used over the period and this is largely down to the way in which our energy usage changes over the seasons. For example, in winter you use more energy to run your boiler.

As a result, you can end up overpaying or under paying your energy bill. If you overpay, your energy account will build up credit.

This credit can be used to:

If you underpay, you will build up debt on your account which may result in your provider increasing your future monthly payments in order to make up for the deficit.

If your debt gets very high, your provider may prevent you from switching until it has all been repaid, despite it being no fault of your own.

Quarterly Direct Debit

If you decide to make quarterly direct debit payments, it will work in the same way as monthly payments, except the payment is taken every three months.

This of course means that the bills will be higher, however the overall cost is similar to that of the monthly scheme, so how often you pay is all down to personal preference.

One thing to keep in mind is that both monthly and quarterly direct debit options are common as they typically result in cheaper energy costs as most providers offer discounts to those paying via direct debit.

Paying with a Prepayment Meter

Another way to pay for your energy is with a prepayment meter. With this, you pay upfront for your gas and electricity and the cost is deducted from your balance whenever you use energy.

Once your balance- or credit- has run out, you will need to top up your meter in order to continue using energy. You can do this by:

The good thing about this is that you never have to worry about overpaying or underpaying your bills- you only pay for what you use, so you’ll never find yourself with a hefty debt to your supplier or end up having to pay more than you can afford for energy you haven’t used.

Paying Upon Receipt

There is also an option to pay your energy bill upon receipt every three months, which is sometimes known as quarterly cash or cheque (QCC).

With this, you can make cash or cheque payments at the Post Office, in a bank or by post and card payments online or over the phone.

However, it is essential to remember to make your payment before the deadline, which can be easy to forget if you run a busy life.

One benefit of paying your energy bill upon receipt is that is you do regularly make all of your payments on time, you may be offered a ‘prompt payment discount’, however direct debit discounts are often much greater.

Paying Your Bill Online or With an App

A selected number of energy suppliers offer apps which you can use to track your usage, check your balance and pay your bill easily from your smartphone or tablet.

Is It Better to Pay Via Direct Debit or Top Up Your Credit?

The best method of paying your energy bill is all down to personal preference and individual circumstances.

The advantage of paying via direct debit is that you never have to worry about missing a payment and being cut off, however, there is always the risk of overpaying or underpaying which can leave you worse off one month or in debt. Additionally, the discounts often make it much more affordable.

The advantage of using a prepayment meter is that you only ever have to pay for the energy you use, however this is typically more expensive than paying direct debit and it can be a burden to have to keep topping it up.

For more information and advice on managing your energy bills, check out our handy gas, electricity and water guides here

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