If you pay for your gas and electricity by direct debit, your supplier could be sitting on a pile of your money. Find out how one Fool claimed back over £250.
If, like me you're regularly amazed at the amount of money leaving your current account each month, no doubt you'll take the time every now and again to make sure what you're paying is correct. And while we all know to check for rogue debit card transactions, or to cancel old payments, what about existing direct debits?
Direct Debit
Direct debit has become a popular way to pay bills. After all, many suppliers will even offer a discount to those choosing this method of payment. However, this is all very well for payments that have a flat charge each month, such as a gym membership fee. But what about the bills that fluctuate each quarter, such as utility charges?
Gas and electricity prices have been steadily increasing over the last few years, driving many of us to switch our suppliers to take advantage of cheaper tariffs. And paying by direct debit is usually the cheapest method, typically saving around five per cent per month.
Suppliers tend to divide up what they reckon we'll use over the year by twelve months, and charge us accordingly. Of course, accounts tend to go into credit in the summer, when usage is low, but this extra money is used up, when we turn up the heat in the winter. Or is it?
Although suppliers calculate the amount of fuel we use, many admit that to some extent this is often more of a guesstimate.
What's more, unusually cold winters mean we use more fuel, and milder springs mean we use less. And although we are told accounts are re-assessed each year or quarter, with the aim of ensuring we pay the correct amount, accounts can quite often be in credit. But did you know that any credit remaining in your account after twelve months can often be simply paid back?
How to Claim
1. Check your most recent bills
If you've made more than 12 payments to a provider and your account is in credit, you should be entitled to claim the excess back.
2. Take a meter reading
Your supplier will need this to check your up-to-date usage.
3. Give your supplier a call
Explain that your account is in credit, and give it the new reading. In most cases it should be able to simply re-credit your bank account with the cash, (or some will send a cheque, although they may charge for this).
4. Check your direct debit
Finally, an account in credit implies your monthly direct debit needs adjustment. Your provider should be able to calculate how much you should be paying per month, and alter your direct debit accordingly.
Alternatively, if you do have a surplus in your account, but don't wish to have it credited back to your account; many suppliers will allow you to use it to reduce your payments. For example, if you had an excess of £120 in your account and pay £30/month, you could use it to reduce those payments to £20/month for a year.
I did a quick check of my gas bill and found that my account was £72 in credit. After a quick phone call and new gas reading, my direct debit was altered to reflect actual usage, and the extra cash was winging its way back to my bank account.
My electricity account was even more surprising -- it currently holds an excess of £184! Needless to say I have just called my provider with a reading and that money should be on its way back by next week.
I gave a few of the biggest gas and electricity suppliers a ring to find out their policies for re-crediting these excess funds back to customers. All of them claim to re-assess accounts each quarter/year and adjust direct debits accordingly:
Powergen
Any surplus money after 12 months will be re-credited to the account once there has been a recent meter reading. Subsequent direct debits can also be adjusted to reflect actual usage.
nPower
Any surplus money after 12 months will be re-credited to the account once there has been a recent meter reading. Subsequent direct debits can also be adjusted to reflect actual usage.
British Gas
British Gas will only refund sums of £50 or more after 12 months, and claims that this money is refunded automatically. It, too, can adjust future direct debits to reflect actual usage.
Atlantic
Any surplus money after 12 months will be re-credited to the account once there has been a recent meter reading. Subsequent direct debits can also be adjusted to reflect actual usage. Atlantic also rewards customer loyalty by refunding one month's payment back into their account after a year, and promises to do the same each year you remain with them.
I must admit I was surprised to learn that my utility providers could be holding onto this much of my cash without me realising. Even more annoying, I realised that without my intervention they would still be sitting on it. In fact, the only supplier that I spoke to that claims to pay back any surplus automatically was British Gas -- although it will only do this for sums above £50.
What's more, although I have been with both my gas and electricity suppliers for over a year, neither had written to inform me that my direct debit would be changing, even though it is clear that I've been paying too much. And it's not just me -- I asked a few friends of mine to check their bills and they found that their gas and electricity accounts had combined balances of between £50 and £100.
So check out those bills and find out if you can claim back surplus cash. After all, who would you prefer to be earning interest from your money -- you, or your suppliers?
More: Utilities - Switch and Save discussion board.