Is it bad for this forum to recommend variable DD payments

anotheruser

Marvel1 said:

£485 in credit, company goes bust, new supplier, how long do you wait to be refunded or whatever happens?

That's almost irrelevent as the money isn't really yours any more - it's gone.
Took me less than a couple of months.  Yes, a month of being in debt with the new company, then I was in credit again.
Didn't affect how much I paid per month.

jimjames

london21 said:

molerat said:

london21 said:

Think most people also do not understand that the DD is not fixed, because as rates have increased the amount will also reflect. It will go up and down based on usage also. 

Fixed for you

I am with Bulb, It's variable.

Well will be fixed if one is on a fixed rate deal. 

Except it won't, another common misconception. The rate is fixed, usage is not and that's what determines your bill and DD. Use more and your DD will go up. Use less and it may go down.

london21

jimjames said:

london21 said:

molerat said:

london21 said:

Think most people also do not understand that the DD is not fixed, because as rates have increased the amount will also reflect. It will go up and down based on usage also. 

Fixed for you

I am with Bulb, It's variable.

Well will be fixed if one is on a fixed rate deal. 

Except it won't, another common misconception. The rate is fixed, usage is not and that's what determines your bill and DD. Use more and your DD will go up. Use less and it may go down.

Off course I meant the rate is fixed. If usage stays the same then will pay the same but the more you use the bill will generally fluctuate. 

Ultrasonic

anotheruser said:

Marvel1 said:

£485 in credit, company goes bust, new supplier, how long do you wait to be refunded or whatever happens?

That's almost irrelevent as the money isn't really yours any more - it's gone.

No, the money isn't gone, and is to all intents and purposes still the account owners'. 

jrawle

Fixed monthly direct debits are a fairly recent phenomenon anyway. It wasn't that long ago when everyone paid a quarterly bill for the energy they had used in the last three months. Those that couldn't manage to budget were on prepayment meters.

Some have expressed that variable DD is bad as someone can be faced with large bills in the winter. This can also happen with fixed DD, if the monthly amount has been estimated as too low by the supplier, resulting in a large debit balance and a sudden hike in monthly payments.

Fixed monthly DD also lulls people into a false sense of security. It removes the link in people's minds between their consumption and the amount they pay. The monthly DD amount is yet another parameter that people have to get their head round. Just look at the all the threads on here where people ask for advice, giving only their DD amount as their "usage".

Ultimately, I'm afraid I can't understand the mentality that paying a fixed amount to a company is manageable, but putting the same amount aside in a savings account isn't. People seem to see their monthly income as a spending target. Of course, I recognise that there are people who are really struggling to pay their bills, and my comment is not aimed at them. But if someone has £0 in their account at the end of each month because they have genuinely spent every penny on essentials, they are equally going to struggle when the supplier increases their fixed DD.

Ultrasonic

jrawle said:

Fixed monthly direct debits are a fairly recent phenomenon anyway. It wasn't that long ago when everyone paid a quarterly bill for the energy they had used in the last three months. Those that couldn't manage to budget were on prepayment meters.

Yes, and the current system of distributing the bill equally across monthly direct debit payments was presumably brought in to be an improvement on this. That an alternative used to be used isn't an argument for this being better.

Ultrasonic

jrawle said:

Ultimately, I'm afraid I can't understand the mentality that paying a fixed amount to a company is manageable, but putting the same amount aside in a savings account isn't.

On this point the principle argument is that energy companies use past usage data to make a reasonable estimate of what the total annual cost will be and then set monthly direct debit payments accordingly. Whilst you may like to think that all customers would do this for themselves and determine what to 'put aside', this simply isn't the reality.

Gerry1

Ultrasonic said:

jrawle said:

Fixed monthly direct debits are a fairly recent phenomenon anyway. It wasn't that long ago when everyone paid a quarterly bill for the energy they had used in the last three months. Those that couldn't manage to budget were on prepayment meters.

Yes, and the current system of distributing the bill equally across monthly direct debit payments was presumably brought in to be an improvement on this.

If it's so good, why are energy companies the only ones to use it?

Ultrasonic

Gerry1 said:

Ultrasonic said:

jrawle said:

Fixed monthly direct debits are a fairly recent phenomenon anyway. It wasn't that long ago when everyone paid a quarterly bill for the energy they had used in the last three months. Those that couldn't manage to budget were on prepayment meters.

Yes, and the current system of distributing the bill equally across monthly direct debit payments was presumably brought in to be an improvement on this.

If it's so good, why are energy companies the only ones to use it?

I can't think of anything appropriate to compare to. Can you? 

Gerry1

Ultrasonic said:

Gerry1 said:

Ultrasonic said:

jrawle said:

Fixed monthly direct debits are a fairly recent phenomenon anyway. It wasn't that long ago when everyone paid a quarterly bill for the energy they had used in the last three months. Those that couldn't manage to budget were on prepayment meters.

Yes, and the current system of distributing the bill equally across monthly direct debit payments was presumably brought in to be an improvement on this.

If it's so good, why are energy companies the only ones to use it?

I can't think of anything appropriate to compare to. Can you? 

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