Ovo Energy to offer interest to customers in credit News Discussion

Maybe I am misunderstanding, but I thought Scottish Power (and perhaps others) paid interest on accounts in credit (at laest where it is between £100 and £500 in credit). Scottish Power started this a year ago!
http://www.guardian.co.uk/money/2009/mar/30/scottish-power-direct-debit-payments

If you mean pay in advance tariffs, (hinted at within the article) again there are suppliers who offer this. They may not pay interest on the amouunt paid in advance, but the customer often gets a reward of lower prices instead for the period the advance payment covers.

In your article is this quote:

One of the biggest sources of complaint within the industry is the setting of direct debit levels and companies holding customers' credit balances.

It would be interesting to see any figures that support that statement.

Certainly on MSE by far the greater amount of complaints is that the DD has been set too low and massive debts built up. This is particularly so when the call centres in the various companies will set the DD initially artificially low to 'lure' customers.

If you use the comparison networks wisely and enter the annual kWh, you will get accurate results. However how many people know their annual consumption in kWh? I suspect the vast majority enter their monthly DD. Or they phone the Utility company or comparison network and tell them their monthly spend and invariably will be told they can have their monthly payments reduced; otherwise why would they switch? and if they don't switch, no commission is paid!!!

I have been approached in Supermarkets by utility company salespeople and asked who supplies me with gas and electricity. When I state BG, without asking what tariff I am on, I am immediately assured that their company is much cheaper.

I posted some years ago about ringing company A and stating I was paying £xx a month. I was immediately offered a sizeable reduction on that DD, Company B was rung and again a reduction was offered on the price of Company A.

In fact there has been conjecture that companies deliberately allow customers to run up debit balances so they cannot leave the company until they have cleared the outstanding debt.

I also have certainly read that averaged over the year companies have a large negative cash flow balance - i.e. they are owed far more than they owe.

In any case just how big a problem is it for an individual if they are in credit? The discounts offered for payment by DD are huge in comparison to any lost interest. If a customer has an average credit balance of £50 throughout the year, he loses about £1 a year in interest.

So Archna do you have any statistics to quantify the 'problem'?

By the way you should mention the maximum you can give them is 1 year's worth of energy so you can't get too carried away using this as a savings account.

I don't think this is quite the bargain its supposted to be. In fact I see it as little more than an interesting gimmick. If you were two hundred pounds in credit for the whole year you'd get six pounds, hardly life changing stuff.

"One of the biggest sources of complaint within the industry is the setting of direct debit levels and companies holding customers' credit blanaces."

I too am inclined to dis-agree with this statement, to be sure a lot of people jump up and down about being in credit. Many demand refunds just as Winter is approaching, then moan when thier account swings from credit (because of the refund) to a large debit because of the uneven nature of gas consumption.

My main concern as a customer, and employee of a utility company is the debt aspect. I frankly cannot believe the balance people are able to build up, the companies MUST take the blame for this. Customers have a responsibility too but lets face it if its your first place most people wouldn't have a clue what to expect.

I do see accounts where there are large credit balances, the majority of those are due to long periods of estimated readings. I see many many more accounts where there is a huge debit, which the customer was not aware of until the bill landed, and leaves them in great difficulty.

To anyone who feels strongly about being in credit I say direct debit is one payment option, it is not essential. There are usually incentives for paying by direct debit but it IS a choice. I'm not saying utility companies are perfect, far from it, but sometimes it just feels like people like to have a good moan.

Reaper wrote: »

Your guess is right and this happened to me with energy company Zest4. You are a creditor and have to stand in line with all the other creditors.

My immediate thoughts of 'great, 3% tax free' became, 'what happens if they go bust, and why are they that keen to get me to lend to them?' followed by 'how do I get my money out anyway?'