There’s a lot of panic about rising energy bill prices, and with winter coming, it’s a very worrying time for many people. 

Some people might be considering joining the Don’t Pay UK campaign. Before making any decisions, you need to read this blog and understand the risks of cancelling your direct debit, which could affect your credit rating and get you into debt. 

A lot of charities and money experts have written articles and been on the TV to warn people about how damaging the Don’t Pay UK campaign could be for some people. It’s especially not a good option if your major concern is the inability to pay your bills.

An alternative strategy to Don’t Pay UK is floating around on social media

On social media particularly, there is a lot of advice that's not fully thought through going around from influencers who don’t understand, or aren’t sharing, the full implications of cancelling your Direct Debit. Following advice from non-experts on the internet (on any subject!) could potentially hurt you if you don’t have the full facts.  

They are suggesting that rather than refusing to pay completely (which the Don’t Pay UK campaign sugguest), you cancel your direct debit instead, note down the banking details and reference number and set up a standing order for the energy you actually use.  

Is this actually a good idea?

Only paying for the energy you use seems like the logical thing to do. But actually, paying by direct debit has a lot of benefits which will make it cheaper and more affordable for you to pay in the long-term. 

Direct debits make your bill cheaper

Many energy providers offer small discounts if you pay by direct debit which you could lose if you cancel and pay by credit or debit card when your bill comes in. 

Having a direct debit also makes it easier for energy firms to refund any overpayments made – as they’ll have your bank account details on their systems. 

You then use this credit to reduce future payments or cover costs in colder months when you need to use more energy.

We’ve also seen people who have already cancelled their direct debit being charged a £4 admin fee each month for the inconvenience of not paying this way. 

It makes your bills more affordable

You may think that you’ve hardly used any energy during this lovely summer we’ve had, so why are you paying the same amount as you’d pay in December? 

There’s a lot of confusion out there as to how paying with a direct debit works – it’s a common myth that energy companies guess how much you’ll use, but they only estimate if they haven’t received a meter reading from you (so make sure you keep sending them through!). And when they do ‘guess’, they consider things such as:

• how much energy you’ve used last year
• how many people live in your home
• how well insulated your home is  
• what time of year it is.

The idea with paying via direct debit is that you pay the same amount of money for your energy all year. This means you pay more than you use in the summer, and then pay less in the winter as you’ve built a balance up. 

The amount you pay will be estimated by your supplier and then divided by 12 to work out your monthly charge. This means you might end up either under or overpaying and you’ll either build up debt or credit.

If you were to cancel and only pay what you use each month because you’re struggling, you’ll find you probably pay less in the summer, but are going to find the winter bills a real challenge unless you budget for them yourself.  

Is it a good idea to cancel my direct debit and then complain to the Energy Ombudsman because my bill is so high? 

Another tactic doing the rounds on social media is to cancel your direct debit and then make a complaint about the size of your bill to your Energy Ombudsman because they can’t force you to pay while the complaint is in progress and it won't hurt your credit rating – although this may not always be the case.

If you have a valid complaint – you should complain. However, your bill being too high is unlikely to be upheld by the Energy Ombudsman and you’ll still have to pay what you owe.

But what if I can’t afford to pay?

It’s absolutely vital that you contact your energy supplier the second you start to struggle and negotiate a payment plan to make things easier. 

Energy companies also offer a range of grants to help people pay off their debts. 

We can help you work out what you’re going to say to them, assist you in figuring out what options they might offer you, as well as tell you what to do if you don’t like the outcome. 

If you’re worried, the worst thing you can do for your wallet and your mental health is to wait until the situation is really bad. Act now, and visit our Managing your money in uncertain times page, which will take you step by step through what you need to be doing to improve your situation.