New Which? Money research has found that paying energy bills by cash or cheque could be almost £100 more expensive a year than paying by direct debit. Can this extra cost really be justified?
Earlier this year a groundswell of public support for the cheque prevented it from being consigned to the scrapheap for good. Happy days then? Well, not if you’re actually planning to use them.
Cheques might still be in existence, but the cost of paying your bills with them appears to be ever increasing. Our investigation into payment methods showed that energy customers paying by cheque are being penalised for the privilege.
The difference in price between paying by quarterly cash or cheque and by monthly direct debit can be high – we found it could reach an average of £98.60 over the course of a year.
Direct debit cheapest for energy
Energy companies normally offer a discount to people who pay by direct debit, since it guarantees payment and makes your account easier and cheaper to manage.
If you pay by cash or cheque, some companies do offer prompt payment discounts if you’re able to pay on time. But these won’t be nearly as high as the ongoing discounts given to direct debit customers.
When it comes to payment methods, research by charity Age UK shows that use of direct debits to pay utility bills decreases directly with age, particularly among the over 70s. But it’s not just older people – many younger customers, especially those in lower-income households, also feel that direct debit gives them less control over what’s going out of their bank account.
Cheque users paying over the odds
We’ve written several times about cheques here on Which? Conversation and the response has always been the same – there are countless situations in which the cheque is the most suitable method of payment and people shouldn’t be unfairly penalised for using them.
While it may suit the energy suppliers to manage direct debit accounts, many of us still prefer more traditional methods. Some simply have no choice.
It’s vital that energy companies develop fair and inclusive systems that ensure all of us are given a fair deal. Any extra charges need to reflect the actual costs to suppliers, and I’m not totally convinced that this is happening.