12% interest??????

pandi22

I'm not sure if I am being stupid but my gas and energy supplier refund 1 months worth of direct debit every year. As I always overpay i have my overpayments back once a year too but they don't take into account the direct debit rebate. The other question too is if I pay an extra £100 a month each on my gas and electric i.e £2400 a year, they repay 1 months worth of direct debit i.e £ 200 and I get my rebate repaid of £2400..... am i being stupid or does this give me an interest rate of 12% ????????

Keith

No.

You get back:-

Total of Direct Debit less Total of Bills = Balance.

No interest?

pandi22

once I have paid my bill, this time I had £300 returned to me. but a 12th of my direct debits, not taking into account the money repaid to me. But for instance, if I paid an EXTRA £100 a month on each utility which would total £2400 a year and had that repaid to me I would still be entitled to £200 back a year as a 12th of my direct debit, which is not 12% but not far off??????

notbritishgas

Perhaps your supplier would not agree to your DD being increased by £100 more than was necessary?

undaunted

I don't see where you get your 12% personally?

If you put £2400 in and get £2600 back surely that's about 8.33%?

Either way if I'm reading your post correctly and you're bills were say £50 p/m

& you paid £50 p/m you will gain £50 (for no extra payments) at the end of the year

If you paid £75 p/m you will gain £75 instead of £50 (but have had to put in £300 to do it - thats 25% then using your logic though actually it isn't because you'd have had £50 of the £75 anyway & hence I'd calculate 8.33%)

If you paid £150 pm you gain £150 so thats about 16.67% on your logic - again I'd say you've gained £100 (because you'd have got £50 anyway if you'd merely paid the £50 p/m bill) which is about 11.11% by my reckoning.

Cardew

As I understand the situation the OP has an annual bill of £1,200(£100 a month). However they pay £200 a month(£2,400 pa)

At the end of the year they refund the £1200 overpaid and one month's payment of £200. So their reasoning is they are getting £200 back from a bill of £1200 - which as stated above is 16.65%

However they have lost interest on the additional £1200 they paid in. So you must deduct that lost interest from the 16.65%

Where the theory falls down is often people pay an insufficient amount throughout the year and build up a large debit balance. Their DD increases by a very large amount for the last couple of months. So if I were to pay £50 a month for 10 months and then(being silly) decided to pay £1,000 a month for the last 2 months, would I get my overpaid amount back plus £1,000?

That said if these matters are handled by a computer without human intervention, that might just happen.

I have an annex that uses tiny amounts of electricity as it is rarely used. For years it has 'earned' me money as the discounts applied to the account are more than the cost of electricity. With the current large Npower annual discount I can get them to pay me for taking both their gas and electricity.