Direct Debits V One Off Payments

[capricorn62]

Why do the utility companies want us to pay monthly DDs? Yes we can get a discount especially online, but the people who need discounts ie, those with no bank accounts or prefer to pay when bills come in, have no choice.

Recently renewed my home ins online & was offered DD monthly or a one off payment which discounted several pounds!

The utility companies say its to do with the amount of work involved but surely if everyone was offered at least a fixed tariff for the year or more. why can`t they do the same as ins comps?

[factor-fiction]

Because it's much easier to collect automated direct debits that are paid on time than process individual payments and chase up late payments. I have never had any problems with DD and find it suits me as well as the company

[factor-fiction]

If you are saying could you pay a year's bill in advance then I agree with you that that should be attractive to Energy Companies. However the amounts are so big I can't see many people stumping up £1500 in advance- and surely those who have no bank accounts have no way to pay such a bill in advance

[hc4361]

With insurance you are buying a product for a fixed term at a fixed price. If you pay monthly you have still entered a 12 month contract and will be heavily penalised if you cancel part way through, it is a credit agreement.
If you pay in full in advance and cancel part way through you will be penalised - eg car insurance for one year is £400. You cancel after 6 months and you will not be refunded £200, it will be much less.

Fuel bills are not a fixed sum that you can pay in advance, the payment will fluctuate depending on use and it is impossible to forecast. If it is set too high the companies will be accused of ripping people off, if it is set too low they wouldn't be able to recover the difference. People will not be considerate about how they use fuel if they know they can use as much as they like for the same bill.

[theshedman]

I wanted to pay for insurance against my fridge and other things breaking in kitchen and wanted to pay cash only to be told that if I did I would get charged £10 more than paying by DD. How can paying in a lump sum in advance cost more than them having to collect it each month from my bank. Think it's just them hoping that you don't cancel at the end of the year and it being on continuous DD so you will carry on paying it.

[gingejbee]

capricorn: whose interests do you think that the utility companies have at heart? Yours or theirs?

[Old_Geezer]

It puts them, rather than you, in control of your wealth, so they can grab what they want from you when they want it. It's possibly cheaper overheads for the company too.

[hc4361]

OG, the can't 'grab what they want, when they want'.

A direct debit instructs your bank to pay a company a fixed amount of money on a certain date from your bank account. If the company wants to change the amount or date they must inform you in plenty of time for you to make alternate payments and cancel the direct debit.

You can cancel the direct debit at any time. If money is taken outside the direct debit agreement you will get it back very quickly. You know exactly how much is being paid out, when.

[EdmundD]

Isn't a Standin Order where you pay a fixed amount? A Direct Debit allows the payee to collect varying amounts.

[EdmundD]

Standing

[ToraToraTora]

I cannot understand how anyone would not just have everything done with a monthly DD and forget about it, all my financnces are automatic and cause me very little effort. I can't remember the last time I entered a bank branch, why would anyone do it any other way? Except OG of course who thinks that DD's etc are in some way risky!

[ToraToraTora]

edmund an SO is initiated by the customer, a direct credit in effect, a DD is initiated by the merchant.

[factor-fiction]

My DDs are all fixed, Edmund. I am notified of any proposed changes in direct debit amounts and have the facility to cancel them if I wish. I have just opened a Santander 123 account and get cashback on all my DDs for utilities, council tax, phones, sky, and I find them extremely convenient

[Old_Geezer]

You are very trusting hc

[boxtops]

I agree with hc - I check my bank statement, I have 20 or so DDs go out every month and have never had a problem. i can cancel them on-line, i can change them on-line. I went in the bank today for the first time since last September.

[Mojo-Jo-Jo]

Then so am I OG. I have everything on DD and I wouldn't change it for anything.

[rockyracoon]

I pay almost everything by DD, except car insurance, to have to write chqs or visit the post office regularly would do my nut in. I've never, ever had a problem with any company taking money they're not entitled to.

[ToraToraTora]

I just could not imagine having to make an effort to go to the bank, write a cheque, etc etc. I've been using DD's for ever and internet banking,never had a penny go missing.

[capricorn62]

Interesting answers from some of you, as I belong to the silver surfer age group I am very aware that a lot of my friends do not have DDs set up & actually prefer to go to the bank & write cheques. They do not get the discounts on their bills like I do, just seems so unfair.
They also do not have computers (although I have persuaded one friend to join the techno world & she is loving it, will not bank/buy online) it just proves that the older generation are very wary of anything they don`t understand!