Why should it be cheaper to pay by Direct Debit?

maryfraser

Why should it be cheaper to pay Fuel bills by Direct debit? Is this not
discriminatory - there are quite a lot of people especially 'Pensioners' out there who cannot adopt this system. I think this has been outlawed in the USA - I am sure someone will be able to correct me if I am wrong! I think it should be outlawed here as well - no discount should be given for Direct Debit - but the argument is that it saves on administration charges - in other words it lets the Fuel companies save on employing staff to administer it!
Why is there not a equilibrium in this respect to allow the same discount on prompt payment of these bills by cash through the Post office?

Mr_K

All companies love direct debits. It's a guaranteed income each month for them. They hope customers won't know/ or bother to cancel them which makes continued custom more likely. In particular with utility bills it allows them to build up big credit balances on which they can earn interest.

I agree with you that prompt payments should get the same discount, but it won't happen.

I personally use them for my own benefit (mostly for getting a discount) but always keep track and in control of them . Lots of people forget about them, which makes lots of companies lots of money.

System

This has already been tested in a UK Court of Law with respect to DD payments to BT.

http://www.telegraph.co.uk/finance/personalfinance/2787793/When-it-pays-to-use-direct-debit-and-when-it-doesnt-pay.html

The thrust of the judgement was that:


a. The user was under no obligation to purchase services from BT; i.e., alternative suppliers were available.

b. The offer of a 'discount' for DD payments was a core term of the contract between the user and the supplier.

Energy companies are not forcing people to use DDs - they are, it could be argued, offering an incentive to do so. The same can be said for online energy tariffs: my energy company has a sentence in its Ts and Cs which reads:

'If you’ve agreed to manage your account online but you don’t follow the rules, we can take your online account management discount away for future bills.'

One could argue that this discriminates against those who do not have access to the internet.

Cardew

Mr_K wrote: »

. Lots of people forget about them, .

I suggest lots more people 'forget' to pay their monthly/quarterly bills on time.

This leads to the expense of sending(several) reminder letters and chasing people who move during a billing period without leaving a forwarding address.

All companies like customers to pay by DD because it is less of an administrative burden and therefor lowers costs. Why should that not be rewarded in a discount?

As a customer I use DD whenever I can because it is less fuss and bother. I use it for water where there is no discount for that very reason.

The DD scheme has certainly not 'been outlawed' in the USA. This from Florida power and light.

What are my payment options?


Ensure on-time payment of your FPL bill with one of our quick and easy payment options:
•FPL Automatic Bill Pay®
•FPL Pay Online
•FPL Pay by Phone®
•Credit/Debit Card Payment
•CheckFree® and your local bank
•Authorized Pay Agent
•Mail


FPL Automatic Bill Pay®A free service that allows you to have your bill amount automatically deducted from your bank account every month on the date you select within the qualifying period.

It is also pertinent that in the USA if you don't pay your electricity bill on time you are cut off without ceremony.

System

There is one energy company that does not penalise quarterly bill payers - or, put another way, incentivise people to use DDs.

https://www.ebico.org.uk/blog/2013/03/08/dd-or-not-dd-that-is-the-question-the-ins-and-outs-of-using-monthly-direct-debit-as-payment-for-your-home-energy/

Wouldn't suit me though, as i would be paying over £200 pa more for my projected usage than with my present supplier.

SoletraderSteve

Why not opt for a variable direct debit such Whole Amount Quarterly or Monthly. No different to what you would be doing quarterly or monthly when the bill comes in but instead of you paying it they will collect the value of your bill from your bank account, in turn you still receive the direct debit rates.

Cardew

SoletraderSteve wrote: »

Why not opt for a variable direct debit such Whole Amount Quarterly or Monthly. No different to what you would be doing quarterly or monthly when the bill comes in but instead of you paying it they will collect the value of your bill from your bank account, in turn you still receive the direct debit rates.

Without checking every supplier, I didn't think many of them offered the Whole Amount Quarterly or Monthly direct Debit facility??


In any case one of the main advantages of the 'normal'* DD is that it enables customers to spread the load over the year instead of being hit with large winter heating bills.


*'normal' DDs are termed variable DDs because the supplier can vary the amount to be collected(after notifying customer)

giraffe69

Why should it be cheaper to pay Fuel bills by Direct debit? Is this not
discriminatory - there are quite a lot of people especially 'Pensioners' out there who cannot adopt this system.

Why should pensioners not be able to use direct debits? Is there an age limit on bank accounts? Won't the majority of pensioners, for example, get their winter fuel benefit by transfer into their account.
It seems a sensible way to pay. Its not compulsory nor should it be but giving a minor discount to reflect the cost savings and to attract people to the method seems good sense.

Those who see a conspiracy or hate direct debits with an illogical passion are fully entitled to have pre pay meters or pay by standing order, cheque or cash.

Bark01

Suppliers have to cost justify discounts they offer to OFGEM. The reason for cheaper DD's is that customers who pay by DD have a lower cost to serve and have a lower risk of bad debt. Its that simple.

All of the major suppliers offer Direct Debit whole amount quarterly with EDF and BG also offering it monthly. But you need to ask for it, you can't normally sign up to it through on-line channels.

r2015

there are quite a lot of people especially 'Pensioners' out there who cannot adopt this system.

Why do people who are not pensioners think that pensioners are thick?

I am a pensioner and most of the postings on this forums about how to heat your home efficiently, get the best deals on your gas and electricity, how even to read your meter correctly are not from pensioners.

They are from people who are just moving into a house by themselves after leaving home or students etc. certainly not pensioners.

I knew how to read a meter when I was 7 or 8, even replace a fuse or put a plug on an appliance, they weren't fitted then, a mixture of 5 amp and 13 amp plugs and sockets as well.

I even knew that 1000 watts was a kilowatt was a unit of electricity.

And how to find a leak in a gas poker pipe with a match and fix it with insulating tape.

So don't post on here about pensioners not knowing about DDs.

matelodave

Hear Hear:T:T:T