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Quarterly direct debit

Understanding quarterly direct debit for energy bills: a comprehensive guide

Emma Spencer
Written by  Emma Spencer
4 min read
Updated: 12 Feb 2024

Some people prefer to pay their energy bills with four larger payments per year, but is this a smart move? Our guide helps you decide

Managing household expenses can be a juggling act, and when it comes to paying for utilities, finding the most cost-effective and convenient method is key.

One option that may not be as familiar to some is the quarterly direct debit for energy bills.

This guide explores what this entails and whether it could be the right choice for your gas and electricity payments.

Understanding quarterly direct debit

A quarterly direct debit means you’ll pay for your gas and electricity every three months, rather than paying every month.

This setup is designed to streamline the payment process, automatically deducting the owed amount from your bank account, thus saving you from the hassle of manual payments.

How it operates

The mechanics of a quarterly direct debit are straightforward. Your energy supplier will calculate a set amount to charge every three months, which is then automatically withdrawn from your bank account.

Before the payment is taken, you'll receive a bill providing a window to review the charges.

If you have a variable direct debit, the amount you’re charged will depend on how much energy you’ve used in the last three months.

For those without smart meters, this means submitting meter readings every quarter.

Kitchen with lights on

Monthly vs. quarterly: a cost comparison

When it comes to savings, direct debit is usually the cheapest way to pay your energy bills.

However, there tends to not be much difference in price between a quarterly and a monthly plan.

Yet, it's worth noting that your total annual bill might be lower with a quarterly direct debit – In fact, you could save more than £100 by paying by direct debit instead of cash or cheque.

Weighing the pros and cons

Before opting for a quarterly direct debit, consider the following advantages and disadvantages:

Advantages

  • Savings: Paying via direct debit can lead to significant annual savings.

  • Review Period: Quarterly payments provide time to assess bills before the automatic deduction.

  • Payment Frequency: For those with fluctuating income, fewer payments may be easier to manage.

Disadvantages

  • Bulk Payments: Every three months, a larger sum is due, which can be a financial strain.

  • Seasonal Costs: After winter, when energy usage is higher, the bill can be particularly hefty.

  • Monthly Savings: Some may find monthly direct debits offer better savings opportunities.

Switching from quarterly direct debit

The flexibility of direct debits allows you to cancel them at your convenience.

However, it's essential to have an alternative payment method ready to avoid disruptions in service.

For those changing banks, the new institution will usually arrange the transfer of all your direct debits and standing orders on your behalf, but double-checking with your supplier is a wise move.

When payments become a challenge

Ensuring you have enough funds to cover your quarterly direct debit is crucial to avoid bank charges.

If you're facing difficulties, immediate communication with your energy company is vital to explore repayment options or alternative arrangements.

Supplier stance on quarterly billing

While most UK suppliers offer quarterly billing, the preference leans towards monthly payments.

However, companies like British Gas provide the flexibility of choosing quarterly billing among other frequency options.

How much is the average quarterly energy bill?

Data from Nimblefins indicates that the average quarterly energy bill in the UK is approximately £441.

This figure translates to an annual cost of around £1,764, inclusive of energy price caps, standing charges, and VAT, based on average consumption.

Is quarterly energy billing right for me?

Quarterly direct debits offer a blend of convenience and potential savings for managing your energy bills.

While it may not suit everyone's financial rhythm, it's a viable option worth considering, especially for those seeking fewer payment dates and a chance to review bills in detail.

If you are struggling to cover the cost of your energy bills, remember that MoneySuperMarket is here to help you find cheaper prices for gas and electricity as soon as they become available.

As with any financial decision, weigh the pros and cons and choose the path that aligns best with your household's needs and budget.

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