This Morning chat, energy supplier wanting to hold 3 months credit!

WiserMiser

Scot_39 said:

WiserMiser said:

... An even better form of budgeting is to opt for MVDD and set up a Standing Order to pay that amount every month into an instant access savings account ring fenced for that purpose.  You won't have to beg your supplier to change the amount, you won't have to wait eight weeks to get the closing balance refunded, plus you'll get a bit of interest, probably up to about 4% if you shop around. 😎

Although your suggestion re second ring fenced account will work - arguably now is not the best time to start it - especially if finances are tight.

As means likely to have to find the extra for large winter bills right now - and so arguably better for those with tight finances to start in spring - to build up the cushion for next winter.

The Op for instance if swapped now  - could have to make 1 if not 2 more payments - at winter higher bill levels - to any new supplier - before could be confident of receiving the refund from Ovo after any switch to a firm offering MVDD.

You can make top-up payments by credit card (even Amex) to suppliers including Octopus and SO Energy, getting up to 56 days' credit if you time it right and the DD doesn't kick in.

EssexHebridean

born_again said:

WiserMiser said:

If Ofgem were any good they'd make all suppliers offer it as an option.  Those who can't budget for themselves would still be able to have equalised DDs.

That's a very sweeping statement. I can more than budget, but prefer the known of a regular payment going out. Which is a very good form of budgeting for many.

There is also the point that it's not everyone is able to set money aside for the bigger winter bills - financial control in domestic violence is sadly a thing that exists. This is why I routinely clap-back against those determined to suggest that "everyone should be on MVDD" - it's simply not suitable for "everyone" and this forum should not be perpetuating a view that it is. 

I'm another that is perfectly capable of managing my money, and yet I still prefer the monthly fixed DD, it just suits me better. I'm also sensible enough to realise that in the grans scheme of things, the couple of hundred pounds of y money that Octopus are holding would earn me so little interest elsewhere that it would effectively not be a good use of my time having to do the additional faffing required! 

Interestingly, even within this thread we are seeing regular MSE posters who are demonstrating a lack of understanding around Variable Direct Debit - so it's not a wonder that there are still more people outside of these forums who would struggle with the concept from a point of understanding.

pseudodox

I have never seen anyone suggest that "everyone should be on MVDD".  But it is often said that MVDD should be an OPTION, which is not the same concept.  And it is usual said with the proviso that you need to be mindful of the lower summer bills v higher winter.  It does not suit everyone but those of it does suit should not be crticised for preferring to be in control of this option.

The most worrying thing on this unrepresentative platform is the regularly seen misconception that FDD is an all you can eat tariff.  How many other people out there are of this mindset & ending up in serious debt when their DDs don't eventually cover their usage & they find their DDs suddenly being increased beyond their affordability because they have not planned for a sharp rise.

Dogbyte009

EssexHebridean said: 

I'm another that is perfectly capable of managing my money, and yet I still prefer the monthly fixed DD, it just suits me better. I'm also sensible enough to realise that in the grans scheme of things, the couple of hundred pounds of y money that Octopus are holding would earn me so little interest elsewhere that it would effectively not be a good use of my time having to do the additional faffing required! 

Same here, I'd much rather have the predictability and know that there will be no nasty surprises should there be a cold spell.

luci

pseudodox said:

The most worrying thing on this unrepresentative platform is the regularly seen misconception that FDD is an all you can eat tariff.  How many other people out there are of this mindset & ending up in serious debt when their DDs don't eventually cover their usage & they find their DDs suddenly being increased beyond their affordability because they have not planned for a sharp rise.

This also concerns me and I would never berate them for misunderstanding. There was one on here last week who had racked up what was a serious debt for them. I felt so sorry for them

pseudodox

@luci
Totally agree.  Lack of education in financial matters bears a lot of responsibility along with a growing trend to leave financial management to "them", be it energy companies, banks, pension providers etc rather than the skill being passed down families from parents as mine guided me to survive on a low income most of my life.  I might have been cold & bored with beans on toast but always had decent shoes, a roof over my head & no debt.

I never get nasty surprise bills for energy because sure as eggs it gets cold in winter in this country.  Plan for the worst & it rarely materialises! I monitor real use regularly through the month so bills are always what I expect.

WiserMiser

Dogbyte009 said:

EssexHebridean said: 

I'm another that is perfectly capable of managing my money, and yet I still prefer the monthly fixed DD, it just suits me better. I'm also sensible enough to realise that in the grans scheme of things, the couple of hundred pounds of y money that Octopus are holding would earn me so little interest elsewhere that it would effectively not be a good use of my time having to do the additional faffing required! 

Same here, I'd much rather have the predictability and know that there will be no nasty surprises should there be a cold spell.

Nope, it's the other way round.  With MVDD you're likely to get a bill within 24-48 hours of submitting your monthly meter read, so any excessive consumption will soon become apparent.

However, if you have so-called Fixed DDs they're likely to be reviewed only every three months at best, but with BG it's six months and could even be 12 months.  You could get quite a shock after a Beast from the East (or two). 😱

https://www.moneysavingexpert.com/utilities/energy-direct-debits/#BG

EssexHebridean

WiserMiser said:

Dogbyte009 said:

EssexHebridean said: 

I'm another that is perfectly capable of managing my money, and yet I still prefer the monthly fixed DD, it just suits me better. I'm also sensible enough to realise that in the grans scheme of things, the couple of hundred pounds of y money that Octopus are holding would earn me so little interest elsewhere that it would effectively not be a good use of my time having to do the additional faffing required! 

Same here, I'd much rather have the predictability and know that there will be no nasty surprises should there be a cold spell.

Nope, it's the other way round.  With MVDD you're likely to get a bill within 24-48 hours of submitting your monthly meter read, so any excessive consumption will soon become apparent.

However, if you have so-called Fixed DDs they're likely to be reviewed only every three months at best, but with BG it's six months and could even be 12 months.  You could get quite a shock after a Beast from the East (or two). 😱

https://www.moneysavingexpert.com/utilities/energy-direct-debits/#BG

If that bill the totals more money than you had allowed for it though, it turns into a problem.  It’s great that MVDD suits you, but you need to accept that it doesn’t suit everyone.


i completely agree that the levels of understanding around energy billing are still worryingly low - it’s something that really needs to be part of essential “life skills education” - personal finances and the basics of taxation and bill paying. As it is, the deficiencies aren’t the fault of those struggling with them - we can’t know things we have never had the opportunity to learn, and we don’t know the information we’re lacking until it comes back to bite us on the bum! 

WiserMiser

EssexHebridean said:

If that bill the totals more money than you had allowed for it though, it turns into a problem.

True, but you'll soon be aware of the problem and can take action, e.g. by increasing your standing order, turning the wick down a bit and wearing a woolly.

EssexHebridean said:
It’s great that MVDD suits you, but you need to accept that it doesn’t suit everyone.

Of course I accept that it doesn't suit everyone !  I've never said it does.

What I have always said is that dozy Ofgem should insist that all suppliers should offer MVDD alongside Equalised DDs. (Not 'Fixed' DDs because they're likely to change every three months, bobbing up and down with the Price Cap.  Also avoids confusion that it'll be the Billed amount that's fixed, the All You Can Eat problem that never goes away.)

That way we'd have a level playing field and everyone would be happy.

luci

pseudodox said:

@luci
Totally agree.  Lack of education in financial matters bears a lot of responsibility along with a growing trend to leave financial management to "them", be it energy companies, banks, pension providers etc rather than the skill being passed down families from parents as mine guided me to survive on a low income most of my life.  I might have been cold & bored with beans on toast but always had decent shoes, a roof over my head & no debt.

I never get nasty surprise bills for energy because sure as eggs it gets cold in winter in this country.  Plan for the worst & it rarely materialises! I monitor real use regularly through the month so bills are always what I expect.

Lack of financial education can be blamed to an extent. However, young people are never off their phones watching or reading junk when they could be reading forums like this to get an understanding about money.

I'm self taught, my parents didn't help me and it was long before the internet. They never had a bank account in their lives, nor a mortgage or any savings. We got our first mortgage when I was 21 and the OH was 23. I budgeted by totting up what the utilities and any other expenditure cost, dividing it by 52 and putting the money in separate envelopes every Thursday when we got paid. I also recorded everything in a notebook, which I still have. 

I had calculated that we could afford the mortgage as long as we only spent on essentials. That left £4 a week spare, but that was fine, as long as it was a plus figure and not a minus. However, before we even made out first payment, the mortgage rate went up to 15% and wiped out our potential "savings". It was an 11% increase on what we had expected to pay.

We got through it, as I had deliberately over estimated our expenditure. We also saved by not going out, not buying clothes, etc for the first 2 years. Today it's a buy now, pay later society. I've had a credit card since I was 18, have always paid in full and have never paid a penny in interest.

There are plenty of resources now to learn how to be financially savvy than there were back then. It doesn't necessarily need financial education.