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Are your bills higher because of how you choose to pay?

There’s no pleasant way to pay the bills, but being charged extra for how you choose to pay is rubbing salt in the wound. Did you know that not paying by direct debit and getting paper bills could cost you £243 a year?

We totted up charges for customers paying for broadband bundles, mobile phone and energy by bank transfer, and receiving itemised paper bills.

And we compared them with those who paid the same bills by direct debit and managed their accounts online.

Say you’d rather pay a bill by bank transfer rather than direct debit. Some companies will charge you up to £60 a year extra for the privilege.

And say you want paper rather than online bills, well that could be an extra £22.80 a year.

It’s reasonable for companies to cover their costs but we think they could be charging customers more than they need to.

Penalised if you avoid online banking?

Many people find managing their accounts online and by direct debit is cheaper and more convenient. But not everyone is able to, or even wants to.

Many of those who want to keep paper bills might not have internet access, for example. But they’ll have to pay up to £1.54 extra a month for an itemised mobile phone bill.

These aren’t the only areas where paying the way you want will cost you. We also found that you have to pay by direct debit to get many of the cheapest energy tariffs.

Meanwhile, you could pay up to £6 if you want a hard copy of your credit card statement.

You can find out which companies apply the biggest charges here.

Should the best savings rates be online only?

It doesn’t end there. In this day and age, not having internet access could mean that you miss out on the best-rate savings accounts. At the time of our investigation, half of the 10 top-paying easy-access accounts on the market were online-only.

Is it fair that these deals are only available to internet-savvy consumers?

How do you prefer to pay your bills? Are you being charged extra for making payments in the way you want to – is it worth the extra cost?


Obviously one customer’s discount is another’s surcharge and it might be better if tariffs were expressed in those terms. I don’t think there should be any utility tariffs that can only be accessed by people who have internet access; that is unjustifiably discriminatory because there are people who cannot possibly access the internet for a whole range of reasons.

In my view there should be a ‘reference price’ for any tariff which can be payable by cheque at no additional charge. Personally I prefer to pay regular household bills by direct debit for my own convenience and don’t really see why there should be a discount, but if companies want to offer that as a marketing strategy so be it – but it should not be funded by those customers who prefer to pay by cheque. The difference between the two rates should only reflect the actual cost to the company of handling cheques. over and above the cost of receiving the equivalent amount in direct debits [they are not free – banks charge companies a lot of money to operate collection accounts and companies spend a lot of money each year on the administration and management of direct debits]. The big advantages to companies of collecting income via direct debits is the reliability of payments, the reduction in arrears, and the lower propensity for disputing or switching.

Paperless billing is similar as there are direct and measurable costs in generating and posting paper bills to customers. Indeed, given the costs of postage, stationery, computer time, energy, technical support, administration and management I am surprised that each paper bill doesn’t have a cost of around £2, so it seems fair to me that people who save companies that expense should benefit.

A lot more transparency all round would help.


I largely agree with John. If it costs less for a company to service an on-line account with direct debit, no paper, no postage, reliable on-time payments etc then the customer who is prepared to deal that way should benefit from the savings. However those savings should reflect the companies savings (plus any incentive they feel appropriate to persuade customers to deal on-line).

The argument about people being discriminated against if they cannot access the internet is one I have some sympathy with but it is not one that these days can be sustained. Look at all the purchases you can make online at prices you cannot get in the shops, whether it is for high-cost home appliances, cars even, down to books, batteries and so on. I’m afraid you cannot close that door.


I should have explained myself better. My objection to discrimination against people without internet access related only to essential utility tariffs, not other forms of commerce.


I can think of some other essentials, such as home insurance.

The extra charges that Joe has mentioned in his introduction look more like profiteering than genuine additional costs.

Which? made a successful super-complaint about excessive card surcharges a few years ago. It looks as if we need action to tackle unfair surcharges for certain forms of payment of bills.

Energy companies are keeping many customers in credit by hundreds and occasionally thousands of pounds. I would like to pay exactly what I owe by direct debit but unless things have changed, that is not an option. Yet Scottish Power have managed to change my direct three times since the start of the year.

It’s time to start to run this country for its citizens and not to serve the needs and whims of business.

I support John’s comments about utility tariffs but there are other essentials such as home insurance.


As I posted in reply in another conversation:

“You can buy energy from a number of suppliers paying for what you have used, rather than by a fixed monthly amount. Use Which? Switch for example and under “payments” choose “Direct Debit” and then “Monthly variable” or “Quarterly variable”. The lowest tariffs offered were comparable with fixed monthly. At least it worked for my part of the world. ” 🙂


I did reply: “Thanks Malcolm. I assure you I have done this periodically and the fixed monthly direct debit has always worked out cheaper.”


wavechange, my comment was intended to point out that there are options to pay for exactly what you use so others are not under the impression that such options don’t exist.


I think I should also qualify my comments in respect of payment by cheque. I suggest this facility should only be available at what I called the ‘reference price’ if payment is made within [say] 21 days [which allows for holiday absences, etc].

BT’s landline tariffs require payment of the line rental for a forward period so they are always in credit on that element. Energy suppliers would probably like to do the same for standing charges if they could.