Over 125k people have currently signed on to cancel their direct debits
As the cost of living crisis spirals on, Money Saving Expert Martin Lewis has issued a fresh warning about Brits cancelling their direct debits for energy bills.
With another price hike expected in October and inflation at a 30-year high, many Brits have pledged to cancel their direct debits and refuse to pay their energy bills. A campaign by the name of “Don’t Pay” has since been released, with 126,490 people currently signed up.
On his YouTube channel earlier this week, a nervous Brit called Joanne questioned whether “there is any mileage in cancelling direct debit payments when the bill comes in?
“So, it’s not giving energy companies money regularly and upfront,” she added.
In response, Lewis said: “Now you will note earlier I said that the price cap for somebody on typical use on direct debit is £3,549 a year, but those who pay and receipt of bills is £3,764 a year.
“So, two hundred pounds a year more, and that’s the big problem you pay more per unit rate of gas and electricity if you pay in receipt of bills.”
Lewis continued to explain why Brits shouldn’t change from direct debit to paying when the bill comes through the door.
He explained: “However, the direct debit is based on the energy firm’s estimate of what you’ll use now. If it’s estimating too high [and] you don’t like it you will get a short-term cash flow gain from switching to paying in receipt of bills – that’s just when they send you a bill, and you pay for it each time so you might pay less money in the short run from it.
“However, over the longer run, because you’re paying more for each unit of energy you use you will pay more in receipt of bills because if you overpay on direct debit you are entitled to that money back, in the long run, I hope that one makes sense.”
Basically, paying via direct debit is cheaper in the long run.
Related links
- UK inflation to hit 19 per cent by January, leading investment bank predicts
- Ofgem director resigns over energy price cap hike amid cost of living crisis
- MPs claim £420,000 to pay their energy bills as Brits increasingly struggle with soaring prices
