I don't really understand how direct debit works?!

Hazel673

Hiya I wonder if anyone can explain this to me.

I have recently moved in to a new house supplied by British Gas for gas and electricity. In my previous house we were on a prepayment meter. When I phoned BG to tell them i'd moved in we set up an account where we now pay for our gas and electric consumption via monthly direct debit. The man on the phone asked me loads of questions in order to make an 'estimate' of how much g and e we would use. This resulted in a dd being set up for Gas £28.50 and Electric £36.50.

What I don't understand is how this pays for my usage? What happens if we use x amount of gas and y amount of electric in a month and it comes to more than what we payed? Or less?

I am of the understanding that BG is rarely the cheapest provider and would like to try and find a cheaper supplier, but really need to understand how it works first.

According to Uswitch I could save £182 a year by switching to Npower, but as this is still based on the BG estimate I don't know if thats right.

Any help would be much appreciated as my brain is about to explode.

Thanks. xxx

McKneff

they have made an estimate on how much they think you will use over the year.

and divided it by 12 = 1 payment per month. this even things out as you wil use a lot more fuel during the winter months than the sumer months.

at the end of the year, you will have paid too much or too little.

Your direct debit payments will be adjusted (taking into account the balance) for the next years payments either by reducing it or increasing it.

So try to think of it on a yearly basis rather than a monthly basis.

You may be under contract with BG so read all the small print as you wont be able to switch suppliers until your contract runs out.

Hazel673

Thanks for that. A bit clearerer now! I better give BG a ring too!! x

KimYeovil

Bite tongue. Behave self.

Cardew

Hazel673 wrote: »

I am of the understanding that BG is rarely the cheapest provider and would like to try and find a cheaper supplier, but really need to understand how it works first.

According to Uswitch I could save £182 a year by switching to Npower, but as this is still based on the BG estimate I don't know if thats right.

I assume that you phoned Uswitch rather than used their internet comparison website?

Be very wary about what USwitch tell you on the phone. Their sole aim is to get you to switch so they get their commission.

The average household in UK pays over £100 a month.

You are paying £65 a month to BG.

There is no way that you are going to save £182 a year on those payments unless your consumption is tiny and they are comparing a standard tariff with an internet tariff.

McKneff

some of these companies come in with a very low direct debit to lure you in then at the end of the 1 year period you have used a lot more than you have paid for so then they add that to next years dds and you end up paying double the direct debit to clear the debt

Do you have any neighbours you can ask about their consumption or another idea is to
ring up your previous supplier to ask how much you used in one year with them. They are
usually pretty accommodating.