Monthly DD: how much should you be in credit

kulath

I know what my annual gas/electric usage is, so know what my monthly direct debit should be (one twelfth of the annual usage). That is not the question.

What I want to know is how much I should be in credit or debit at the end of different quarters? Obviously the supplier would want me to be in credit most of the time. Why shouldn't I have a zero balance immediately before the highest bill, and then a debit balance after all the other bills (i.e. except the one before the highest bill)?

Most of the discussions about monthly direct debits say that you will be in credit part of the time and in debit part of the time, but why? Is there some balance that we regard as 'fair' to the supplier?

My supplier reviewed my bill in May, and because I was in debit increased the payment to pay off the debit over the next 12 months (as well as the usage) which is outrageous because my largest bill is at the end of Jan, and I am now in credit by £100 which I think I should reclaim and set my DD back to the usage figure.

What credit figure is reasonable?

KimYeovil

With most suppliers the zero point is April/May.

A £100 credit is VERY small for this time of year. What is your total annual bill? If it's less than £300 then you have cause to complain. Otherwise you're lucky they are not putting up the debits even higher.

(Remember that the standards have changed - all suppliers want customers to be in credit twelve months of the year.)

Cardew

Most firms give a large discount for paying by DD. If you don't like the system you can pay quarterly and lose the discount.

This discount dwarfs any lost interest they get from your money; and £100 earns you about 30p a month in interest.

Besides they haven't charged you interest when you were in debit in May and you are paying them back over 12 months interest free.

Anyway for someone with an average bill of £1200 pa I would think you should be in credit by £200 to £300 at the start of winter.

property.advert

Obviously it depends upon when you start on DD, how much larger your high points are over average (which is your DD amount). Theoretically, you would be best off if you went to DD just as you started the highest charging period as you would always be behind, only balancing the books a year later, unless your high and low were so vastly different and at opposing times of the year so that you could go into credit at that time. Doubtful, but mathematically possible.

As stated above, they want you in credit, it is free money for them but they usually have some system which rebates over a certain amount. It doesn't matter really unless you are massively in credit.

brewerdave

If I wasn't switching this month I would expect to be ~ £250 in credit in October for annual usage equivalent to £1500 ie about two months payment. As Cardew says, its not a lot of lost interest - since the £250 will be gone by April it is literally pence lost vs the big discounts you are getting by paying by DD - The only danger is that the supplier may try to slip a big increase in DD thru for no good reason - You just have to be VIGILANT!!