Paying Utility Bills by Monthly Direct Debit

I have been paying my gas, phone and electricity bills every quarter and my water bill twice a year. That's how DH had the payments set up before I moved in and I just left them as they were.

I'm considering changing them all to monthly payments to make budgeting a little easier.

However, I've heard horrror stories about people who paid their utility bills monthly and had their bills increased to ridiculous amounts that they couldn't pay because the bills were estimated.

Is there any truth to these stories?

Could I end up paying much more overall if I switched from quarterly to monthly, or would it just be the same amount spread out over more payments? Is it possible that the people who these horror stories are about wouldn't have been able to pay their bills no matter how frequently they had to make payments?

What have the experences of people on UKY been like?

Monthly direct debit is usually the cheapest way to pay because you get discounts for doing it that way. Also, if you send in your meter readings they won't give you an estimated bill; if they send you an estimated bill first you can then send in your meter readings and they'll readjust before you have to pay anything at all. I highly recommend monthly DD, it's definitely the best way to pay I think.

We pay our phone bill monthly, but electricity and gas is quarterly -- all direct debit.  Initially we tried to get electric and gas set up for monthly billing, so that we could get a handle on what our monthly expenses would be, but the company refused because we didn't have any UK credit.    It was a little odd, because they'd know if we weren't paying sooner with a monthly bill than a quarterly one.  But we didn't push and it's still quarterly.   

A few months ago, we did get a notice that we had a crazy bill coming, and it turns out the meter reader had mixed up some numbers -- so it's not only estimated bills that can be crazy high.

It's not too bad because it all evens out at the end of the year.  For instance, they just wacked our monthly DD up quite a lot b/c we just had a high meter reading for last quarter (all the cold weather).  So to make up the deficit, we're paying more per month for the next quarter.  After that meter reading in 3 months, the rates will go back down again to adjust for the lower usage coming up in the summer.  Does that make sense?  I think you just have to make sure you're giving prompt readings and not letting them get away with estimated bills.  Also, you can at any time phone up and ask them to reduce your monthly DD and cash-pay the deficit separately.

When we 1st set up the acct, they wanted to set our monthly DD at something quite high, so I just called and said we had been paying £xx with our previous company, can we start off with that and see how it goes?  They did it, no argument.

It's not too bad because it all evens out at the end of the year.

So is the problem just that people don't budget for the whole year and would pay the same amount in general?

So for example, if you would normally pay £300 in autumn and £600 in winter (these are just made up amounts) if you paid by quarter, you would pay £100 + £100 + £100 and then £200+£200+£200 and people are shocked because the bill goes up from £100 to £200? Is that how it works?

I would expect to pay more at some times of the  year than others.

I'm just wondering where those horror stories about people going into debt doing to outrageous monthly utility bills come from. Is it just that they couldn't afford to pay their bills no matte what?

So is the problem just that people don't budget for the whole year and would pay the same amount in general?

So for example, if you would normally pay £300 in autumn and £600 in winter (these are just made up amounts) if you paid by quarter, you would pay £100 + £100 + £100 and then £200+£200+£200 and people are shocked because the bill goes up from £100 to £200? Is that how it works?

What problem?

99% of the time there is no problem; I've never seen any figures but from personal experience I'd say most people in the country pay by DD which they wouldn't do if it was so terrible.

It's the rarity that make s the 'horror stories' news worthy.  I'm sure some of it is people bad budgeting and some down to mis-billing or too many estimated bills but it's not something most people need worry about.

If you are worried about estimated bills you always have the option of taking a reading yourself and phoning it in to customer service.  There's a good piece on moneysavingexpert.com about this - he advises you do it whenever there's a price change to make sure you're billed at the correct rate.

I think what happens is that people set up monthly DDs that are too low for their consumption. Then the end of the year comes and they've underpaid and have to make it all up because they haven't kept track. If you have an idea of what you normally pay, set up your monthly DDs to spread that through the year and you should be fine. If you normally pay £100 a quarter, set up a DD of £25 a month. The problem would come with someone who would pay £100 a quarter and set up a DD of £10 a month.

I didn't realise that you decided how much your monthly direct debit was going to be. I thought the company just  billed you based on whatever your last meter reading was, that they decided how much you would pay each month, not you.

As a rule you don't.  They set an amount based on your estimated yearly bill divided by 12 but you can query their estimate and ask them to change the billing amount.

No, the point of monthly DDs is that you pay the same each month.

Thanks. Sorry I was so confused.

Since, according to the companies' websites, monthly payments are based on previous consumption I guess it's probably not a good idea for me to set monthly direct debits up now because we've just moved to a new home, so we're not using the same amount of energy that we were using in the old home, and we are just now making changes to things so we can save more energy in our new home and hopefully our upcoming bills will be lower than our latest bills.  I guess it's best to wait till we are all set up with the energy-saving stuff.

You could wait but they'll estimate based of the size of your home - they do it often enough that they should be in the right ball-park.  Make sure you give them a meter reading after a few months so they adjust if they were off with the estimate.

I agree with PR. You'll save money anyway because I think pretty much all the energy companies now give a discount for paying by monthly DD.

Thanks. Sorry I was so confused.

We definitely were, too.  Until reading this thread, I thought it was possible to be billed based on the actual reading of the previous month.  Oops!

We set ours up for a new home and have had no problems. As stated before its based on average of household size.
Other thing i would suggest is setting up a joint account for household dd's to go out of.  As long as you have money in the account for each month and no dd's are refused to be paid by the bank for lack of funds it'll help your credit out too.