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Monthly Variable Direct Debit

Monthly variable direct debit energy bills

Emma Spencer
Written by  Emma Spencer
5 min read
Updated: 07 Feb 2024

Energy bills are among our most costly household outgoings and knowing which payment method to choose can be confusing. Get some clarity with our full guide.

What is a variable direct debit?

A variable direct debit is not your run-of-the-mill payment method. Unlike fixed payments, the amount you pay can change each time, reflecting your actual usage. This could be on a monthly or quarterly basis, depending on your agreement with the energy provider.

During the summer months, you might find yourself using less heating and enjoying longer daylight hours, leading to a credit balance in your energy account. This surplus can be a boon when winter arrives, bringing with it the inevitable increase in energy usage.

A variable direct debit accommodates these fluctuations, ensuring you're only billed for your actual consumption.

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Advantages of monthly variable direct debits

Opting for monthly variable direct debits comes with a host of benefits:

  • Cost-effective: Many providers offer discounts for choosing this payment method

  • Manageable monthly payments: Bills are broken down into smaller, more digestible amounts

  • Pay for what you use: No more estimates; your payments reflect your actual energy usage

  • Convenience: Payments are automatically taken from your account, saving you time and hassle

  • Bill control: You have a clearer view of your energy costs, allowing for better budgeting

Disadvantages of monthly variable direct debit

However, with the good comes the challenging:

  • Fluctuating bills: Your bills will vary with your energy usage, which might complicate your budgeting

  • Meter readings: You'll need to keep up with providing regular meter readings to avoid estimated bills that could lead to overpayment

You may have other concerns such as what would happen to your direct debit payments if you were to switch your bank account. However, there is no need to worry about this.

Most banks now have a dedicated switching service and they will move all your direct debits and standing orders from your old account to your new. Find out your switching date so you can double check all your expected payments have gone out and call them immediately if any have gone amiss.

In most cases, if you do receive a charge because of late payment of a direct debit due to switching, you will be refunded by your new bank.

If, for any reason you wanted to stop your direct debit, you would simply have to call into your bank branch or contact them by internet or phone. You may be required to confirm your intention to cancel the direct debit in writing. You should also send your energy provider a copy of the letter.

You should always make sure there are enough funds in your bank account to pay the direct debit. If, when the energy company come to take the money from your account there is not enough, you may end up with bank charges if it is returned unpaid.

In this case, you should credit your account as soon as possible so that the money is available if the direct debit is requested again. If you are concerned that you are not going to be able to make your direct debit payments then you should contact your energy company so that they can look into a more manageable payment method for you.

Compare energy prices to see all the options available to you.

Is it better to be on a variable direct debit for energy bills?

Deciding on whether to pay your energy bills using variable direct debit really comes down to personal preference.

At a time when household budgets are squeezed, building up credit in an energy account when that money could be used elsewhere means that a variable direct debit might seem like a good idea.

However, those that do not always have lots of cash to hand may find that it’s better to opt against variable bills. This way, you can control exactly how much goes out of your bank account each month and budget accordingly.

If your energy account builds up a lot of credit, you can request a refund. Energy companies have become a lot better at paying these out in recent times.

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