Martin Lewis has issued a warning to anyone considering cancelling their Direct Debit energy payments.
This comes as the energy regulator confirmed the price cap will rise by 80 per cent on October 1, pushing the average bill to £3,549 (around £295 per month). In July inflation hit 10.1 per cent as the cost of living continues to rise, with three-quarters of Scottish households to fall into fuel poverty.
Speaking on ITV's This Morning, financial guru Martin Lewis was on hand to explain the changes and took calls from concerned viewers.
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One woman asked if she should cancel her Direct Debit, but Martin explained how she could end up paying more in the long run.
Joanne asked Martin: "Is there any mileage in cancelling Direct Debit payments and paying when the bill comes in, so as not to give energy companies money regularly and upfront?”
Martin went on to explain how people who do not pay by Direct Debit will pay £200 more if they choose to pay when they are billed by their supplier.
He said: “You pay more per unit rate of gas and electricity if you pay in receipt of bills, however, the Direct Debit is based on the energy firm’s estimate of what you’ll use.
“If it’s estimating too high, or you don’t like it, you will get a short-term cash flow gain from switching to paying in receipt of bills - where they send you a bill and you pay for it each time.”
Martin continued: “So, you might pay less money in the short-run from it, 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.
“If you overpay on Direct Debit you are entitled to that money back in the long-run.”
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