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How should I pay my energy bills?

Paying a bill

It matters how you pay your gas and electricity bills

Is your current energy bill payment method right for you? Our Words that Count financial resilience campaign aims to help you understand more about the ways you can pay your energy bills so you can make the best decision to suit your situation.

Chris Grimes shares his tips on best ways to pay your energy bills

We asked TikToker Chris Grimes to shed some light on the different methods of paying your UK electricity and gas bills. Chris is on a mission to help you reduce your debts and understand your energy bill payments. In the first of his two-part video series with us for Words that Count, Chris explains how the way you pay your bills can make a difference to your finances. The Words that Count campaign also believes that the more you understand about the financial terms and complicated phrases associated with energy bills and payment methods, the more confident you'll feel about choosing the right payment methods to suit your needs.

Watch the video below about the best ways to pay your energy bills, this is the first video in Chris's two-part series. Weigh up the best options for you by reading Chris' top tips below and then scroll to the bottom of the page to have a go at our quiz for a chance to test your knowledge.

For a glossary of financial terms like 'direct debit' which are connected to this topic, head to our related article: Paying your bills. Check out Chris' first video and find more information to help you understand the words and phrases in your energy bill here.

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TikToker Chris Grimes reminds us of his top tips on ways to pay your energy bills

Chris explains in his video that the way in which you pay your energy bills might mean that you are actually paying more than you need. This extra cost will add up over a year and have an impact on your finances so it's important to understand how you are paying now and the different methods that will work best for you in your current situation. Take a look at two ways to pay:

Benefits of paying your energy bills by direct debit

A direct debit is an agreement with a company to take money from your bank account on a set date each month to cover the cost of a regular payment like your energy bills. Chris suggests that energy providers will typically offer discounts to customers who pay their energy bills by direct debit and therefore, save you money in the long run. This is because the company can plan the amount of money they will receive from you, the customer, so both you and the company can be prepared for the fixed cost.

12-month budget plan paid via direct debit

When you sign up to a 12-month energy plan, the price you're paying month to month won't change and you could end up in credit. Your energy company will estimate how much gas and electricity you will use in one year (also known as your annual usage) based on the amount of energy you used in your previous year. Therefore, your 12-month budget plan will be more accurate a prediction because it is using the measurements from your previous year and splitting the cost of your total 12-month payments evenly across each month. You will find that you can plan how much money you spend on your gas and electricity bills over the full year without waiting to see how much energy you actually use and paying per month.

Pay as you use via direct debit

Another method is to pay using direct debit either monthly or quarterly. If you pay quarterly, that means you pay a bill for your gas and electric once every three months of the year. This method also means that you pay for the amount of gas and electric that you use per month based on your actual meter reading. So rather than with the 12-month budget plan which means you will pay a fixed amount each month based on an estimate, you will find your payments might fluctuate. For example, you will probably use less gas and electricity, and therefore be charged less money, in the spring and summer months because you won't need as much heating or need the lights turned on for as long. However, you will spend more in the winter months when you have the heating on longer.

This method of payment could mean that you struggle to budget each month as you will not know the exact amount that will be coming out of your bank account.

Prepayment meter: Pay as you use energy

Pay-as-you-go or prepayment meters require you to pay for your energy units before you use them. Therefore, you will only pay for equally what you use. This is usually through topping up with a smartcard, token or key at a local newsagent, or by using an app.

This method might work for you if you're on a tight budget, or you're in and out and not often at home. However, it is always best to think about your budget and plan ahead.

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