Off-Set Accounts and Bill Payments

southerndave

I am trying to work out something and would appreciate opinion, advice and information.

Offset mortgage with Virgin One current rate is 4%.

Bills are currently on direct debit (water, electric, etc). Some offer discount for paying this way others don't. Looking at these account, most if not all are in credit, some by hundreds. This is mainly as we are in the last week or so before the quarerly 'bill' is due, so once this period has passed the amount in credit will have dropped accordingly.

Now if I took a fictional example and started in January with a £20 direct debit, by April I would have paid out £60. If my bill was due only £55, this would leave a £5 credit to be carried over. The next month another £20 goes out and so on.

My question is would it be better to have not had direct debit and left this amount in the account so that my One account balance would have been reduced by £20 for 3 months, another £20 for 2 months and a final £20 for 1 month (if I explained that right!) assuming I had left the 'payments' in the account. When my bill came in I would have merely paid exactly what was owed before starting over, leaving £5 in my One account reducing my overall balance.

In other words are direct debits without any payments discount not the wisest thing for One Account / Off-set account owners?

wymondham

It does not make sense to pay more than you have to regardless of if you have a One Account, so unless you like to build up a surplus for say, the winter (if heating etc) then yes it does make sense to only pay bills as and when they become due. Anything left in the One Account reduces the amount of interest you pay.

Good choice of account by the way, encouraged me to sort my finances out!

southerndave

No worries! That's what I though regarding Direct Debit. We signed up for the initially to take advantage of discounts, but it seems most discounts are wiped out by the amount of 'in credit' £££s you end up each month that are merely rolled forward to the next bill. I have just worked out our BT one and if we allow for paying for the pleasure of paying by cheque quarterly, we break even, BUT the saved up money sits in our account until its due. I think from my crude calculations we gain from some of the others.