Increased bills due to no direct debit - Eon Next

Savedotmoney

I decided to start paying my electricity/gas bill with my debit card which gives me 1% cashback.

In the cost of living crisis I was thinking about ways I can make more money back and make the card work for me.

Great I thought. I emailed Eon Next and explained this to them and their response was that they had a "receipt of bills tariff" as opposed to the "direct debit tariff." 

The difference in these tariffs for me is £115.03 a year.

I thought that why in these times are energy companies allowed to get away with this when the bills will still be paid on time regardless? 

Before I received an email back from Eon Next I managed to get through on the phone and the chap on the phone said there is no issue with paying by card and never mentioned any additional cost. 

This was the email I received from Eon Next:

Good day
Thank you for getting in touch with us, we love hearing from you.
My name is Keenen and I will be your Eon next energy specialist assisting you today.
We have looked into your account and we can see that you are on a direct debit tariff, your direct debit has been cancelled as well.
In order to change your payment method you would also have to change you tariff to a receipt of bills tariff as the payment method yo would like to use will be paid as a cash payment method.
Please see below receipt of bills tariffs available, please choose one that best suites you:

Are they using tactics like this to raise even more money? Are families who can already not afford their energy bills being tied in to new contracts/spending more money unnecessarily? 

gefnew

No they have a set of different charges depending how you pay, the cheapest method with any provider will be Direct Debit.
You was informed of this when you called them so no not a scam .
E.ON Tariffs for 2022: Gas & Electricity Prices (selectra.co.uk)

MWT

I'm sorry if this sounds a little unsympathetic, but you have decided to change from making regular advance payments to paying in arrears so you can make a little money from the cashback, so you opened the door to a tariff change, this isn't something they did without warning you...

Even on Ofgem capped tariffs there is a different rate for a standard credit tariff vs DD advance payments...

Savedotmoney

Maybe so but if a bill is paid on time, a bill is paid on time. Because they get their money half a month earlier they can charge more on their tariff? When I'm using just as much energy as I did before. Their processes stink.

QrizB

Savedotmoney said:

I thought that why in these times are energy companies allowed to get away with this when the bills will still be paid on time regardless?

It costs more to administer a cash/credit account than it does a DD one. As a result energy companies are allowed to charge more. This is relatively well known and will be shown in the T&C for your tariff.

There are a few suppliers with the same tariff for both payment methods but E.ON Next are not one of them.

Are they using tactics like this to raise even more money? Are families who can already not afford their energy bills being tied in to new contracts/spending more money unnecessarily?

People who are careful with their energy bills will normally choose the lowest-cost means of payment. Cash/credit tariffs are generally the most expensive option, more than prepayment or DD.
You can see this clearly on EDF's rate card:
https://www.edfenergy.com/sites/default/files/r505_deemed_rate_card.pdf

Ultrasonic

It is not unreasonable for card payments to cost you more given the energy companies will have to pay more in fees compared to direct debits. 

Out of interest, what debit card do you have? It's usually credit cards that offer cashback, and 1% is a good amount.

QrizB

Savedotmoney said:

Maybe so but if a bill is paid on time, a bill is paid on time.

People (in general) on cash/credit tariffs have more scope to run up arrears and not pay their bills compared to those on DD tariffs. This increases the cost of administering cash/credit accounts and is part of the reason why those tariffs are more expensive.

400ixl

You are more of a risk to them, and wanting to use a method which has more overhead cost to them and as such they are covering that risk by charging you more.

Savedotmoney

The cost of administration for others' mistakes, it should be billed on an account by account basis.

Maybe I don't quite understand how they electronically generating a bill and me paying by card costs an extra £115 a year. 

Ultrasonic said:

It is not unreasonable for card payments to cost you more given the energy companies will have to pay more in fees compared to direct debits. 

Out of interest, what debit card do you have? It's usually credit cards that offer cashback, and 1% is a good amount.

Chase offer 1% for a year.

Astria

The way they normally get around is that they don't charge you for using your credit/debit card, and there's no surcharge for pay on receipt of bill.

However, they is a discount if you decide to pay by direct debit as it's far cheaper to collect payments via direct debits.

I still get 2% cashback on my direct debits to Sainsburys Energy however and don't have to hassle of having to make a payment every month

Ultrasonic

Astria said:

I still get 2% cashback on my direct debits to Sainsburys Energy however and don't have to hassle of having to make a payment every month

Santander? I do the same but there is an account fee to factor in too of course.