If you pay your energy bills by direct debit, consumer guru Martin Lewis has an important message for you.
The financial expert is urging everyone who pays by direct debit to check how much their payments will be from May and whether they have built up a substantial amount of credit that would be better off in their pocket, than their provider’s. Martin told Good Morning Britain viewers that energy providers are sitting on an estimated £7bn in customer credit.
He used a graph to show how direct debits are higher during the colder months to account for increased usage. But as we head into the warmer months - and with energy bills expected to drop by around 20% from July - many people could be paying too much and need to take action, reports the Daily Record.
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The consumer journalist explained: "This week is the week you start to pay off that debt and move into credit which peaks in November before it starts to go down again. This week is the week in the year you should have the least amount of credit."
He added: "Exactly how much you’ll have depends on when you started with the energy firm."
Two graphs helped simplify what he meant by the ‘energy direct debit cycle’. The first graph showed that if someone started paying their direct debit with their provider in May, they should always be in credit, while someone who started paying by direct debit in November, will always be in debit.
Martin continued: "Effectively, there’s no reason to be in credit right now because this is the lowest point in the cycle." He added that having half a month’s worth of credit is "okay" but warned: "If you’re two or three months in credit right now, that’s too much."
Martin continued: "Of course, you need to have done a meter reading so that the firm is accurate on what your credit is - you should always have up to date meter readings or make sure your smart meter is doing that beforehand. That’s why right now is the right time to go to your energy account, have a look whether you are in credit or not and if you are in credit, and it’s a substantial amount, that is when I would be asking for the money back."
He added: "At the start of May, you shouldn’t really have any credit - you don’t need any."
One viewer shared her success with getting a refund on her energy credit. Kerry contacted the show to say that she had £700 in credit, requested a refund of £500 and Octopus Energy paid it into her bank account within one week.
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