Energy bills are continuing to sky rocket and many householders will be wondering how they can afford to pay their gas and electricity bills. Latest predictions forecast that annual bills could reach £4,266 in January.
The energy price cap, which limits the rates a supplier can charge for each unit of gas and electricity householder's use, will go up in October and possibly again in January, according to energy industry analysts Cornwall Insight. They are predicting an average annual bill of £3,582 - £200 higher than their previous estimate.
In January 2023, the next time the cap is due to be changed, the analysts expects it to go up again to £4,266. It means the average household would be paying £355 a month, instead of £164 a month currently.
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But what happens to customers who simply can't pay their energy bill direct debits, and cancel the payments altogether? New reports suggest Britons who do this face "long-term consequences" regarding future applications." Some of the most severe consequences are set to include the ability to get a loan or mortgage in the future.
This warning comes as The Don’t Pay UK Campaign calls on bill-payers to cancel their direct debit payments from October 1, 2022 to coincide with Ofgem lifting the energy price cap once again.
Brean Horne, a personal finance expert at comparison site, NerdWallet, has shared some of the risks associated with not paying or cancelling a direct debit set with your current energy supplier.
He said: “Although some consumers may be tempted, to follow The Don’t Pay UK movement, there may be dire long-term consequences. Suppliers usually charge customers, and are likely to face a non-payment fee. Energy customers face additional fees if they avoid paying their monthly direct debit.
“While direct debit tends to be the cheapest and most convenient way to pay for gas and electricity, your supplier is likely to send you bills at a much higher rate if you cancel, which will be added to the arrears. If you have arrears and do not arrange to start paying back what is owed, your supplier can begin the process of moving you over to a prepayment meter. "
Mr Horne also said missed payments and defaults on an energy bill can also cause harm your credit score, in a similar way to missing a payment for a loan or credit card.
He added: “Having a poor credit score can make securing finance from a lender much more difficult because it indicates you may struggle to pay back what you borrow based on your payment history."
Those who are already struggling to keep up with their energy payments - or believe they will - can seek help from Citizens Advice for impartial advice and guidance. Homeowners may also be able to take advantage of certain benefits, grants and help offered by the government and energy suppliers.
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