Martin Lewis warning to people considering cancelling energy bill direct debits
30 August 2022, 06:35 | Updated: 20 September 2022, 15:46
Money Saving Expert Martin Lewis is warning households that their energy bills could go up if they stop their direct debit payments.
Martin Lewis has given advice about the new price cap announced by Ofgem.
Last week, the industry regulator announced that energy bills for 24 million households on a standard tariff will increase by 80 percent from October.
This takes the average household bill from £1,971 to £3,549 per year and will remain in place until December 31.
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VIDEO: The energy price cap is up 80% on 1 Oct and likely worse in January.
— Martin Lewis (@MartinSLewis) August 26, 2022
This is my full practical briefing on what it means, how it works, and including a Q&A.
Pls share.
For subtitles and full video go to https://t.co/EhknU6IdpT pic.twitter.com/kJPOSLgGxJ
Energy analysts predict it could increase again to around £5,400 in January and a whopping £7,000 by April.
Many households are considering cancelling their Direct Debits to save money in the short term as these are based on estimates of usage.
But Martin has warned this could end up costing families more in the long run and leave them with a hefty bill,
In the 13-minute long video, the Money Saving Expert explained to a customer that who do not pay by Direct Debit will pay £200 more if they choose to pay when they are billed by their supplier.
"You will get a short term cash flow gain from switching to paying in receipt of bills,” he said.
"However, over the longer run, because you're paying more for each unit of energy you use, you will pay more in receipt of bills.
"Because if you overpay on direct debit you are entitled to that money back."
Those who pay by direct debit will often get a discount too, which is automatic so could save you money.
Martin went on to say there are no fixed tariff deals advertised at the moment and the only way to find out if one is available is to contact your supplier directly.
He advised that if your supplier offers you a fix that is less than two-and-a-half times the new price cap, then it may reduce costs ahead of next year.
However, this isn't a guarantee so it's important to read all the information on tariff fixes on MoneySavingExpert.com.
If you're struggling with energy costs or other bills there are organisations giving advice for free, including National Debtline, Step Change and Citizens Advice.
