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Cardew

I can't believe we are having this discussion again.

All of the companies let you have up to 3 months credit by paying quarterly. If you have an average bill of £1200 pa(£100 a month) and pay a hundred pounds a month into your bank account, over the year you will have an average bank balance of £150. If you are lucky enough to get 3% interest on that account and only pay tax at 20% you will gain £3.60p a year in interest. Most people will gain less than a couple of pounds.

Virtually all of the companies offer you a discount for paying them that £100 by Direct Debit. Apart from the advantages to the customer of smoothing out payments over the year, they offer this discount because it gives them a steady cash flow and the account is easier to manage - no chasing payments etc.

The discounts they offer are huge in comparison to the meagre interest you will get by putting money in the bank and paying quarterly. For instance with EON fix on line it is 8% = £96. Npower = £94.50 EDF = £72 BG = £105 (figures from energyhelpline)

You don't have to elect to pay by DD, you can pay quarterly if you wish. However if you do ask to pay by Direct Debit it really is a complete nonsense to accuse the companies of 'scamming' customers!!! - Unbelievable!!

welshwomble

Well you were not obliged to reply. It could well be that this has been discussed before. I can only go by my own experience.

Talking to friends and neighbours I have to say that your view is not reflected by them.

I think you have to work out what is best for you, and your own circumstances.

Poosmate

I pay my gas and electric bills quarterly having been stung by BG's DD hike - from £34 pcm to £232!!! one November. Ruined Christmas for me.

I would rather forgo the DD discount and be sure that I am in total control of my outgoings where BG are concerned. Peace of mind - priceless! For everything else there's DD!

What I would say though Welshwomble, is that you don't have a leg to stand on regarding the £50 funds being taken out and putting you into your overdraft. SP may make an exception and pay your bank charges but it's highly unlikely. Regardless of whether your SP account was in credit or not, that £50 was going to be taken out and it is your responsibility to ensure the funds are in your bank account to cover that. I think I'd be more worried as to why the funds were not there and if the same was likely to happen next month. Although, granted you may have reduced the DD to £35 and it may not be a problem next month.

Poo

Cardew

welshwomble wrote: »

Well you were not obliged to reply. It could well be that this has been discussed before. I can only go by my own experience.

Talking to friends and neighbours I have to say that your view is not reflected by them.

I think you have to work out what is best for you, and your own circumstances.

Of course you do what is best for yourself - who would say different. For most of us on a Money Saving Website that means getting £80 or so discount instead of £3 or so interest - obviously that excludes most of your friends and neighbours

The point that is unbelievable is that you accuse 'Scottish Power and others are getting away with a nice little scam in getting millions of people to provide them with an interest free loan.' for a scheme that pays their customers thirty or more times the interest lost and is a payment method for which the customers have to apply

brewerdave

The way to maximise the advantage of these DD schemes is to try to always switch around August/September. If you set up the initial DD at 1/12 of your expected annual consumption then the earliest that the utility supplier will want to increase the DD will be the following April/May when you will probably be a few ££100s in deficit. If they increase the dd too much, phone up and get it adjusted downwards to a figure which will result in a relatively small surplus by September when you switch and repeat the process.

Scottish_Power

Hi brewerdave

I fully appreciate that everyone has an opinion on how the Direct Debit payment scheme should work and thats understandable. I have to be honest and highlight that I am not kean on your proposal and I will explain why. If you start a new account in August, i.e. you have a zero balance on your account at this time, and your payments are set at an amount that will cover your use over 12-months, we will review the payments after 3-months, however for discussions sake, lets review the payments in April/May as you have suggested. As you have been through the coldest 6-months of the year, you will likely have an outstanding balance on your account (due to you using more than your monthly Direct Debit payment) and our billing system will review your payments and increase the amount. Our billing system does not operate in a way that will encourage customer to create an outstanding balance on their account.

I will give you another example of why I would not want anyone to have a build up of debt on their account at any time of the year. If people were to work on your proposal, lets say its February and you have an outstanding balance of £250 on your account. Another supplier has just introduced a new tariff that offers much cheaper rates than what you are currently being billed on and you want to change onto this new tariff before it is too late. In order for you to change supplier, you will first have to pay any outstanding balance on your account before you will be allowed to leave your current supplier. This may be fine for some people, but I would suggest that most people would struggle to come up with £250 (not long after Christmas). It might take a few months to clear this balance, by which time the new tariff is no longer being offered and you have lost out on good savings.

Any opinions on this situation will be much appreciated.

Kind Regards

Colin @ ScottishPower

neil9313

welshwomble wrote: »

Well you were not obliged to reply. It could well be that this has been discussed before. I can only go by my own experience.

Talking to friends and neighbours I have to say that your view is not reflected by them.

I think you have to work out what is best for you, and your own circumstances.

It costs you a lot more if you do not pay by DD its a no brainer, best get your friends on MSE

sofa-spud

brewerdave wrote: »

The way to maximise the advantage of these DD schemes is to try to always switch around August/September. If you set up the initial DD at 1/12 of your expected annual consumption then the earliest that the utility supplier will want to increase the DD will be the following April/May when you will probably be a few ££100s in deficit. If they increase the dd too much, phone up and get it adjusted downwards to a figure which will result in a relatively small surplus by September when you switch and repeat the process.

Thanks, this was the point I was trying to make:o
It is still our responsibility to manage our finances, my view is that doing it this way I have (slightly) more control over where my money is.
Its all very well the suppliers giving various reasons to build a surplus, but for those who can manage their own budgets the suppliers 'preferred' method is simply unneccesary.

KimYeovil

welshwomble wrote: »

I will be seeking to get this back from Scottish power on the basis. that they did not need to take the monthly £50 direct debit given that I was over £100 in credit.

What a silly idea. I hope your bank charges you a grotesque amount in penalties and a dozen other debits end up not being paid. Completely ridiculous post.

brewerdave

scottishpower_company_representative wrote: »

Hi brewerdave

I fully appreciate that everyone has an opinion on how the Direct Debit payment scheme should work and thats understandable. I have to be honest and highlight that I am not kean on your proposal and I will explain why. If you start a new account in August, i.e. you have a zero balance on your account at this time, and your payments are set at an amount that will cover your use over 12-months, we will review the payments after 3-months, however for discussions sake, lets review the payments in April/May as you have suggested. As you have been through the coldest 6-months of the year, you will likely have an outstanding balance on your account (due to you using more than your monthly Direct Debit payment) and our billing system will review your payments and increase the amount. Our billing system does not operate in a way that will encourage customer to create an outstanding balance on their account.

I will give you another example of why I would not want anyone to have a build up of debt on their account at any time of the year. If people were to work on your proposal, lets say its February and you have an outstanding balance of £250 on your account. Another supplier has just introduced a new tariff that offers much cheaper rates than what you are currently being billed on and you want to change onto this new tariff before it is too late. In order for you to change supplier, you will first have to pay any outstanding balance on your account before you will be allowed to leave your current supplier. This may be fine for some people, but I would suggest that most people would struggle to come up with £250 (not long after Christmas). It might take a few months to clear this balance, by which time the new tariff is no longer being offered and you have lost out on good savings.

Any opinions on this situation will be much appreciated.

Kind Regards

Colin @ ScottishPower

Colin, my last four switches have all been carried out ~ August/September - so I've always had either a relatively small deficit or surplus at switch over.
My current tariff runs out July 2011 so my plan will be to switch as soon as possible after that plan ends UNLESS my current supplier comes up with a good deal.
I accept that my methodology would not suit everyone (and certainly doesn't suit the Utility Companies!) but allows me to minimise my bills and my monthly outgoings. As a matter of interest I was with SP a couple of years ago and,having accepted my original figures for monthly outgoings you did attempt to increase my DD after a few months. I phoned up, explained my logic for a lower DD (that there would be a small credit balance by the end of 12 months),and successfully persuaded your Customer Services to accept the lower DD.When I left you I had a credit balance anyway so with the higher DDs you wanted to set up I would have been owed in excess of £300 !!!