Paying via DD

MarkyMarkD

And it depends when in the year you start getting supplied. If you start in the autumn, you are likely to owe them money all the way through your annual payment plan - if the monthly payments are set correctly - because you will use more than average for the first 6 months of the payment plan, and then less than average in the second 6 months.

Problems people have noted with the amount of the DD are easily sorted. Simply refuse your supplier's requests until they accept the correct amount. You will know what you were paying your existing supplier. Pay them the same amount - or less, if they are claiming to be cheaper (but more likely at present the same amount, because price increases will affect your comparison). If people simply give in to stupid DD increases from their suppliers, that's their own fault.

And even if you do over-pay on a monthly DD plan, the savings from DD are vastly more, as Cardew points out, than the tiny amount of lost interest.

Dreamnine

I agree. I never pay by DD. With DD, they can take what they want, basically.

DCFC79

Dreamnine wrote: »

I agree. I never pay by DD. With DD, they can take what they want, basically.

if they do then get it back, ive got DD set up and ive not had any more taken than what should be

Cardew

Dreamnine wrote: »

I agree. I never pay by DD. With DD, they can take what they want, basically.

They simply cannot 'take what they like'

Under the Bank Direct Debit Guarantee they must notify you in advance if they are going to increase your DD and if you don't like it, you stop the DD and either negotiate an acceptable amount, or revert to quarterly payment.

If they don't notify you, the bank will refund the payment.

I can understand why some people prefer quarterly payment. However from a Money Saving perspective, Direct Debit is the winner in most cases - and by a considerable margin.

Dreamnine

I'd much rather my money was in my account than any utility companies. For the little power and gas I consume any discount is negligible.

I prefer to view it as utility companies penalising me for paying quarterly. The way they penalise those on fixed-incomes with pre-payment meters.

Cardew

Dreamnine wrote: »

I'd much rather my money was in my account than any utility companies. For the little power and gas I consume any discount is negligible.

I prefer to view it as utility companies penalising me for paying quarterly. The way they penalise those on fixed-incomes with pre-payment meters.

If the discount for DD is negligble, then the interest on money in your account is a fraction of that negligble amount!

Utility companies give a discount for DD because they get predictable payments(cash flow) and don't have to send out reminder after reminder for overdue accounts - it eases their administrative costs.

If your insistence on quarterly bills costs the company extra money to run your account, then it is reasonable that you don't get a discount - it is not penalising you.

KimYeovil

Cardew: If your insistence on quarterly bills costs the company extra money to run your account, then it is reasonable that you don't get a discount - it is not penalising you.

That is [STRIKE]a lie[/STRIKE] not entirely fair, Cardew. It is a penalty, it is not a discount. It is delinquent payers who cost more, not those with quarterly bills. It would be more just to charge delinquent payers the cost of their negligence. Unfortunately this is not possible because of sites like this. And if direct debits are such a great thing, why are all the discounts not applied monthly? It is a cynical way to introduce twelve month contracts.

Cardew

KimYeovil wrote: »

That is [strike]a lie[/strike] not entirely fair, Cardew. It is a penalty, it is not a discount. It is delinquent payers who cost more, not those with quarterly bills. It would be more just to charge delinquent payers the cost of their negligence. Unfortunately this is not possible because of sites like this. And if direct debits are such a great thing, why are all the discounts not applied monthly? It is a cynical way to introduce twelve month contracts.

IMO it doesn't matter if we consider it a penalty, or a reward(discount) for paying by DD.

It is a commercial decision by the majority of companies that Direct Debit is the way they want customers to pay and they offer a carrot or threaten with a stick to persuade customers to pay by DD.

Agreed delinquent payers are one factor that increase costs and it would be just if they could penalise them. However in UK it has become unacceptable for those who cannot, or will not, pay bills to be treated harshly.


Living in the USA I can tell you that if you miss paying a bill you might get one reminder if you are lucky. Then you are cut off and not reconnected until you pay what is owed, and a hefty re-connection fee.

DGJsaver

MarkyMarkD wrote: »

Those who say "don't use DD" are those who have had incorrect amounts taken, or who aren't capable of keeping enough money in their current accounts to meet their DD payments when they fall due, and hence incur charges.

Astounding arrogance there Mark

My Mother NEVER pays by DD , and certainly is capable of running her affairs perfectly

She likes to pay the bills as and when they arrive , and thats her perogative , not everyone needs babysitting to pay their bills on time and in full

MarkyMarkD

"Prerogative".

I said those who say don't use DD, not those who use DD. I don't imagine your mother is an evangelist for paying via other methods.

Those who post on MSE about DD being evil are always those who harbour irrational fears like "they can take as much money as they like" or who don't intend to pay their debts on time, and hence prefer paying (late) by BACS or cash or cheque or whatever.

As Cardew keeps saying, our point is that DD is the most cost-effective payment method for both the supplier and the customer, and it will always save customers more money than any tiny amount of lost interest due to paying too early. Unless you are constantly overdrawn, in which case the cost of paying too early is far greater than the loss of a few pennies' credit interest.

Taking the usual challenges one by one:

- "they can take too much" - either you have agreed a monthly DD payment which is too much (in which case, don't) or they make an administrative error (in which case, reclaim the amount taken, and any related charges, under the DD guarantee
- "they can take it when I haven't got the money to pay it" - get the supplier to set the payment date immediately after pay-day, not before; if they take it early (which hardly ever happens) then demand it back (and any related charges) under the DD guarantee
- "I am losing interest because they are taking too much money and my supply account is well in credit" - the interest on £400 for a year at 6% is £24; that's way less than the DD discount from most suppliers. Few people are more than that amount in credit and if they are, then challenge the supplier to reduce the DD amount
- "I prefer being in control" - paying a fixed amount, on the same day each month, is more 'being in control' than paying random amounts per your quarterly bill
- "I know where I am if I pay my quarterly bills in full and I don't run up debit/credit balances" - a fine objection, as long as you are content to pay the higher unit price associated with non-DD methods.

I think that's covered most of the recurring ones. If you love paying by quarterly credit statement, go ahead. But don't criticise DD payment as a method, because it's better value in almost all cases for all parties involved.