MONTHLY DIRECT DEBITS AND WHAT IS A REASONABLE AMOUNT TO BE IN DEBT IN MAY

caro69

Ok.  So, traditionally I am sure at the end of Winter beginning of Spring/Summer it was reasonable to be several hundred pounds in debt to your energy provider.  The idea being that over summer credit would build for next Winter.  I am only £19 in debit to Octopus at the moment but they want to raise my DD.  Is this them trying to build their bank balance up rather than mine?  Reasonable or not with energy prices falling as we go through the year, hopefully?

MWT

It was never 'reasonable' to be in debt to the tune of several hundred pounds...

You do need to keep your Octopus account in credit at all times and so, yes I would be expecting your DD to go up, especially as the Government support has ended as well, but what matters is how much they want to raise it to, and does that equate to around 1/12th of a reasonable estimate of your annual use...

bristolleedsfan

https://octopus.energy/blog/direct-debit-payments/

caro69

MWT said:

It was never 'reasonable' to be in debt to the tune of several hundred pounds...

You do need to keep your Octopus account in credit at all times and so, yes I would be expecting your DD to go up, especially as the Government support has ended as well, but what matters is how much they want to raise it to, and does that equate to around 1/12th of a reasonable estimate of your annual use...

I beg to differ.  It certainly was reasonable to be in debt during the winter months and then in credit during the summer months.  That's how we evened out a regular 12 monthly payment.  The monthly payment is way over 1/12th of what i expect to pay over the next twelve months, so be careful guys, even Octopus seem to planning on boosting their bank balance over summer.  

If you follow you idea of always being in credit you might as well pay the full every time they bill you.  Completely goes again the idea of having a regular monthly payment.  

km1500

I always thought the idea was to gradually build up credit over the summer months which will then be slowly run down over the winter months IE you were never actually in debit

saintscouple

I thought the idea was to build up a pot of credit over the warmer months, so you don´t get into debt over the winter months....... and this seems to be what Octopus are implementing here. 

Xbigman

caro69 said:

MWT said:

It was never 'reasonable' to be in debt to the tune of several hundred pounds...

You do need to keep your Octopus account in credit at all times and so, yes I would be expecting your DD to go up, especially as the Government support has ended as well, but what matters is how much they want to raise it to, and does that equate to around 1/12th of a reasonable estimate of your annual use...

I beg to differ.  It certainly was reasonable to be in debt during the winter months and then in credit during the summer months.  That's how we evened out a regular 12 monthly payment.  The monthly payment is way over 1/12th of what i expect to pay over the next twelve months, so be careful guys, even Octopus seem to planning on boosting their bank balance over summer.  

If you follow you idea of always being in credit you might as well pay the full every time they bill you.  Completely goes again the idea of having a regular monthly payment.  

As to your first point, you didn't actually tell us how much you were being asked to pay or what you thought it should be. How is anyone supposed to make a judgement with zero information. 

Your second point is a good one, which is why many on this board pay by variable monthly DD and think this should be the default option. Me included.


Darren

caro69

km1500 said:

I always thought the idea was to gradually build up credit over the summer months which will then be slowly run down over the winter months IE you were never actually in debit

No way I'm afraid.  I'm going back to when 12 monthly payments started back in the late 80s/90s.  I've probably been around longer then you and a lot on here I imagine.  Otherwise why would MSE savvy people not put a monthly payment into a savings account and earn some interest over summer to use during winter?  Martin never recommended that because we were always in debit over the winter.  Why would you give your energy supplier money in advance for them to earn interest in and boost their bank accounts.  Think about it.

caro69

saintscouple said:

I thought the idea was to build up a pot of credit over the warmer months, so you don´t get into debt over the winter months....... and this seems to be what Octopus are implementing here. 

No way I'm afraid.  I'm going back to when 12 monthly payments started back in the late 80s/90s.  I've probably been around longer then you and a lot on here I imagine.  Otherwise why would MSE savvy people not put a monthly payment into a savings account and earn some interest over summer to use during winter?  Martin never recommended that because we were always in debit over the winter.  Why would you give your energy supplier money in advance for them to earn interest in and boost their bank accounts.  Think about it.

elsien

If you are hundred of pounds in debt at this time of year, then your summer payments will pay off part of that debt and then leave you in more debt for the coming winter. Seems a bit back to front to me.

dunstonh

MONTHLY DIRECT DEBITS AND WHAT IS A REASONABLE AMOUNT TO BE IN DEBT IN MAY

Aptril/ May is the time when you should be around zero.  Anything from this point on should be building summer credit for the next winter.

So, traditionally I am sure at the end of Winter beginning of Spring/Summer it was reasonable to be several hundred pounds in debt to your energy provider. 

No. Being in debt with a utility company was not reasonable.

 I am only £19 in debit to Octopus at the moment but they want to raise my DD.  Is this them trying to build their bank balance up rather than mine?

2022 was a drought year and extremely mild.  Heating use was around 20% down across most of the UK.  So, if you are still in debt by May, albeit by a tiny amount, then it is reasonable to pay a bit more as this year may not be a drought year.    However, the unknown bit is the next quarter pricing.   You may get lucky but they dont know that and are working to current levels.

I beg to differ.  It certainly was reasonable to be in debt during the winter months and then in credit during the summer months.  That's how we evened out a regular 12 monthly payment.  The monthly payment is way over 1/12th of what i expect to pay over the next twelve months, so be careful guys, even Octopus seem to planning on boosting their bank balance over summer.  

The aim was to build credit over summer which you could use over winter.  Not in reverse.

If you follow you idea of always being in credit you might as well pay the full every time they bill you.  Completely goes again the idea of having a regular monthly payment.  

Monthly payments are there to help people budget.  Not to borrow money from the energy supplier.