Financial expert Martin Lewis has issued a warning to Brits paying for their energy using a Direct Debit. In this week’s show, he discussed the new Chancellor, Jeremy Hunt, and the plans to scrap the two years energy price guarantee.
The Chancellor has scrapped plans for the guarantee to last two years with it now set to run until April next year. Mr Lewis says this will lead to a huge price hike for bill payers.
The Guarantee, which had replaced Ofgem’s price cap, prevented bills rising from £1,971 to a predicted £6,000 this winter. But now, Mr Lewis has told viewers that, according to early forecasts, the nation is facing a 73 percent hike from April – taking bills to an estimated £4,350.
Mr Lewis had to issue yet another warning to British Gas and EDF customers who pay their bills by Direct Debits, warning that the companies only review their Direct Debits twice a year. What this means for customers is that they could be facing yet another price rise in their payments next year, the Daily Record reports.
He said: “Direct Debits are currently being assessed by some firms on the back of that 27 percent rise to the energy price guarantee [£2,500], all the major firms are doing it, but there are two I want to point out though. British Gas and EDF, big firms there. If you’re a customer of one of those firms, unlike the others, they don’t recalculate your Direct Debit when there’s a price move.
“They just do it at two points in the year – normally the sixth month and one year anniversary of when you joined – which means you may stay on your current Direct Debit for the next few months even though the rate you’re being charged is higher. That means when they do alter your Direct Debit, the increase is likely to be much bigger because you’ve got to catch up.”
Mr Lewis has advised customers to speak to their supplier to increase the Direct Debit now, to avoid being hit by another big bill shock down the line.
Pensioner, Yvonne, got in touch with the Money Show to discuss the huge leap to her own payments. She said: “I have just received my new monthly Direct Debit from my energy provider and it has gone from £49 per month to £123 for September and then £181 from October 28th. I am in credit of £200, is this correct, as this will be one week’s pension money.”
Martin explained that most people can expect their bills to double this winter, as energy prices have doubled since last year and that was expected to happen. However, he said there are three checks to make before contacting your energy supplier and asking them to review the amount you are expected to pay.
Martin Lewis shares three Direct Debit payment checks
Are you giving regular meter readings or do you have a working smart meter?
- If you don’t, you need to get in touch with your supplier as the estimate could be wrong.
Are you in bill credit or debt?
- If you’re in credit, your bill shouldn’t go up much.
Have you come off a cheap fix?
- If you have, your bill would have increased by far more than double over the last year.
If you pass all three of those tests, Martin explained that there are calculators online which can show you what your Direct Debit should be. He said: “I suggest you put your details into that to give you an idea of what you really should be paying and then you get in touch with the energy firm and ask them why your Direct Debit is going up.”
Martin added that you should mention to them that you are in credit and how your bill has gone up but you’re on the price cap. He said if they can’t justify the rise, you can then ask them to review the Direct Debit amount.