Variable Direct Debits

Shrimply

JJ_Egan wrote: »

My preference is to pay the DD based upon my yearly average .
That means i am overpaying in the warmer months but building up a cushion for the more expensive months .
With current interest rates the thought of me earning the pathetic interest does not enter my mind .
As i am with OVO i get 3% on my credit balances and come the end of winter if the DD is to high i can drop it and even withdraw part/all of the excess .

I think the point is though that it is a preference, and it's nice to be allowed to choose. I still put a set amount aside each month over the year so that it balances out but it's in my account and under my control. There is no need to mess around with getting balances back or adjusting direct debits etc

Honestly, once everything is set up with First:Utility it's not a problem and compared to Scottish Power the website is a breath of fresh air. You can also switch over to a variable direct debit through your account so wouldn't even need to contact them (Although you do if you then wish to switch back to fixed payments)

footyguy

alderpoint wrote: »

I much prefer MY money to be sitting in MY account offsetting MY mortgage, than sitting in the energy co's account and earning THEM money.

I've been with First Utility for quite a few years now, paying by variable direct debit, i.e. they send me a bill each month, and then two week later they take the full amount due by direct debit. This months payment will be £37.24.

All things being equal I would prefer that too. Indeed for many years I used the old fashioned system of waiting for a quarterly bill to arrive and then paying it when I felt like doing so (within reason ... the suppliers did tend to get a bit narked after they sent you a couple of RED reminders)

Then I realised just how much this was actually costing me. As MSE Dan L says, the best deals usually require you to pay a 'fixed' monthly direct debit. You get used to it eventually, and see the benefit in your bank balance at the end of the year.

footyguy

Shrimply wrote: »

I think the point is though that it is a preference, and it's nice to be allowed to choose. I still put a set amount aside each month over the year so that it balances out but it's in my account and under my control. ...

But it doesn't usually balance out as you usually end up paying a lot more unless you agree to a 'fixed' MDD.

(I am aware that there is no difference in price with FU, but FU are not the cheapest for me ... and even it they were, I doubt I would use them, but that's another story based on past experience with them)

JJ_Egan

Far to many FU problems posted on this board for me to ever consider them .Yes i know like many companies the ones who are happy never post .

footyguy

Coedy wrote: »

...It's not about the interest for me though, Its just if my bills are cheaper in the summer I can spend that money out and about the place doing stuff and over the winter when its miserable anyway I can stay in.

I find I usually spend more money going out in Winter than in Summer.

In summer we are happy to enjoy many things that are free e.g. the countryside, coast, and there are many free open air events available.

In winter, when its cold, and often wet, then we often end up in a local bar or restaurant, at the pictures or undercover in a nice warm shopping mall ... which usually means spending something in the shops there.

Coedy

footyguy wrote: »

I find I usually spend more money going out in Winter than in Summer.

In summer we are happy to enjoy many things that are free e.g. the countryside, coast, and there are many free open air events available.

In winter, when its cold, and often wet, then we often end up in a local bar or restaurant, at the pictures or undercover in a nice warm shopping mall ... which usually means spending something in the shops there.

We both hate winter so usually try and avoid going out and getting wet, cold and windswept...(we are in Wales rememebr, where a wet summer is considered dry :rotfl:)
but in the house where its dry and warm we have netflix which we have available every month and a cupboard full of snacks. The only difference obviously is Christmas parties and presents. But we never seem to be drawn out to do stuff in the Winter.

Nada666

Shrimply wrote: »

How it can possibly cost a company more to generate a variable direct debit bill compared to a fixed direct debit bill is a bit beyond me. And to have to pay £70 for the privilege is ridicules.

It doesn't. That's not the issue.

I don't disagree with you all - people who pay quarterly at the Post Office or however within fourteen or thirty-two days of the bill should not pay a penny extra. People who pay late should carry the whole weight of penalties. That is not how the industry is set up.

Trouble is, your solution would result in you paying £230 more just so that you don't pay £70 more than others! It is wrong that the 60 or 70% of customers who don't switch carry the burden of costs. But that is their choice.

Scottish Power tried to be reasonable a few years ago - they offered a generous prompt payment discount. Unfortunately Ofgem et al clamped down on them and banned this 'egregious' practice.

Shrimply

Nada666 wrote: »

It doesn't. That's not the issue.

I don't disagree with you all - people who pay quarterly at the Post Office or however within fourteen or thirty-two days of the bill should not pay a penny extra. People who pay late should carry the whole weight of penalties. That is not how the industry is set up.

Trouble is, your solution would result in you paying £230 more just so that you don't pay £70 more than others! It is wrong that the 60 or 70% of customers who don't switch carry the burden of costs. But that is their choice.

Scottish Power tried to be reasonable a few years ago - they offered a generous prompt payment discount. Unfortunately Ofgem et al clamped down on them and banned this 'egregious' practice.

While that may be the case. I've just been told by the E.On rep on another thread that the reason for the charge is due the extra cost in managing the account when you aren't paying a fixed monthly direct debit. Depending on how you interpret that I guess it could be the same or a different argument.

And I get the point that for people paying quarterly there is more risk in building up large debts, but surely people that are clearing their entire debt each month are actually lower risk, especially when paying by direct debit.

If I switch now for instance to E.On they will set my direct debt to £26 a month. By the end of winter I will be in debt with them.

Now this is all just argument for arguments sake really, because they aren't going to change it just because I'm moaning about it. However, I'm not entirely sure why variable direct debts aren't more widely offered.

So for just now, I'm going to hold off and hope that First:Utility bring out a more competitive tariff before the end of the collective switch. I may end up switching to E.On as it will save me money and just have to put up with the fixed direct debit payments.

System

There is a confusion here as, semantically, there is no such thing as a variable direct debit. What you have signed is a 'continuous payment authority' which allows a supplier to collect variable amounts through the Direct Debit Scheme. Administratively, there is more to CPAs as opposed to fixed Monthly DDs. The latter are batch managed each month and reviewed twice a year by the supplier. For a CPA, the supplier has to take action every three months.

When a Fixed Direct Debit is used then the supplier also gets money on account - particularly, if it is a Spring annual review date. Cheap borrowing for which the supplier offers a discount.

At the end of the day, this is very much a matter of personal choice.

Bark01

EDF offer 'Whole Amount' direct debit for either monthly or quarterly billing. You pay the amount billed not an amount that tries to average out payments over 12 months.

Its exactly the same price as all their other DD tariffs, so sound like what you are after.

Not sure if you can sign up to it via comparison sites. But once signed up to EDF you can switch to it online or via EDF customer service at no detriment.