Martin Lewis shared a crucial new warning to everyone paying their energy bills by direct debit during an appearance on This Morning earlier this week. The consumer champion explained to viewers that direct debit is still the cheapest way to pay for gas or electricity bills and anyone thinking of cancelling should be prepared to pay more.
He also urged anyone with more than one or two months’ worth of credit on their energy account to contact their supplier and ask for a refund. If they refuse, offering excuses that the credit is needed for the winter months when usage is higher, the financial journalist advises making a formal complaint and if that doesn't work, make a complaint to the energy ombudsman.
Co-presenter Josie Gibson read out the question from a This Morning viewer who said they had £2,500 in credit on their energy account - £2,000 on gas and £500 on electricity, but their supplier had refused to give them a refund.
Martin responded: ‘At this time of the year you should have minimum credit. Now, £2,500 in credit sounds a lot but I have to say it does depend on what your bills are.
“I tend to say if right now you have a month or two worth of direct debit in credit - so let’s say if your bills are £300 a month - if you’ve got £500 of credit that’s probably on the high side. So unless your direct debit is over £1,000 a month, which is unlikely but does happen, it sounds like you are too much in credit.”
He continued: “The fact that energy bills will be dropping in July means you don’t need as much credit as you did. Now under energy firms licence and conditions they cannot unreasonably hold on to your money.
“I would make a formal complaint asking them to justify why you are so much in credit and unless you get a decent justified answer, I would then take them to the energy ombudsman.”
But he also suggested telling the company before making the complaint to the ombudsman as that might prompt them to make the refund.
Josie also asked Martin if cancelling the direct debit was an option to which Martin replied quickly with an emphatic “no!”
He explained: “Direct debit is the cheapest way to pay, payment in receipt of bills can be six or seven per cent expensive.
“If you really don’t like paying by monthly direct debit, where your usage is smoothed out over the year, then ask [your supplier] if you can switch to variable direct debit that keeps you on the same cheap rate but then you pay each month based on what you’ve used.
“But do remember, when it comes to winter that means your bills are going to be massive - in summer it’s easy, in winter it’s not. The problem isn’t monthly direct debits, it’s the terrible implementation of the way a few firms do monthly direct debits.”
Martin also advises taking a meter reading before contacting your energy supplier to make sure details of your usage are up to date.
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