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The Most Cost-Effective Way to Pay Your Bills

By B贸 | March 27th 2020

With so many different household bills it can seem a lot of work to keep on top of them, here are some simple steps you can take to get your bills in order and save some money along the way.

Keeping on top of your bills can be tough. Indeed, in 2017/18 3 million people were behind with one or more of their bills including utilities, council tax, water, rent. Not paying bills on time can place you into debt, affect your credit rating and could make it hard to buy a home. If you're finding it a struggle to pay on time, here are some tips on how to pay bills in the UK - and what is the most cost-effective way of doing so.

How to pay bills in the UK

With so many different household bills it can seem a lot of work to keep on top of them, here are some simple steps you can take to get your bills in order and save some money along the way:

Organise your bills

Make sure you know what all your main household bills are, how much they should be and when they need to be paid. If you get paper bills put them in a folder or save digital bills on a computer. By putting reminders in your calendar you'll know what day you need to pay each bill so you don't forget.

Even better, set it up so you pay your bills all in one day/week, that way it's easy to see if you're on track when you check your accounts.

Choose a payment method that suits you

There are several options for paying your bills. Each one has its pros and cons, and the method you choose ultimately depends on your situation. Let's look at the different ways of paying the bills to see which more cost-effective - and which is right for you.

Direct debit is often the cheapest way to pay bills in the UK. Most companies like to know that they're going to have money come in regularly each month and will often offer discounts if you do this.

Option 1: Direct Debit

A direct debit is an agreement you have with the company you are paying bills to for them to take a set amount of money out of your account on either a monthly or quarterly basis.

For example, for gas and electricity bills, the amount you pay is set by the energy company who will estimate how much energy you are likely to use in that time. Obviously for energy, in winter people use more energy and in summer they use less. As a result, your actual usage will go up and down, but the direct debit will remain the same. Bu keeping an eye on your bills, you'll start to see if the direct debit is actually overcharging you - you can then ask the energy company to reduce it. On the other hand, it might turn out that you are using more energy than expected, so they will want to increase the direct debit - or tell you to pay the difference when you leave the property or change supplier.

Pros: Direct debit is often the cheapest way to pay bills in the UK. Most companies like to know that they're going to have money come in regularly each month and will often offer discounts if you do this. It also means as long as you have enough money in your account your bills are paid on time and you'll avoid late payment charges.

Cons: You are signing up to an agreement where you have to pay a certain amount of money each month. If your income is unpredictable - if you're on a zero-hour contract or are a student for instance - this can be stressful.

Option 2: Pay your bill on receipt

If you bank online or by phone you can often pay your bills directly.

Pros: This option can be quick and easy and you're in control of what you pay and when. For bills like energy and water (if you have a meter) this option is a little like going to a restaurant - you only pay for what you've consumed at the end of a time period - typically a month or quarter. This also means you can change how you use energy or water in the home and see the savings almost immediately in your bill.

Cons: It's unlikely you will get any discounts and if you pay this way, you have to be very organised because if you forget to pay, it can affect your credit score.

Option 3: Paypoint, Prepaid meters and payment cards

In the post office and at PayPoint terminals in your local shop or convenience store you can pay for a range of bills. For utility bills, in particular, this is a bit like a pay-as-you-go phone.

  • If you have a prepayment meter in your building, you will normally need to take a key or token to a PayPoint terminal at your local shops and top up before putting the key or token back in the machine.
  • With a payment card, you don't need a meter but take a card to a PayPoint terminal or the Post Office to buy more energy when you can afford it.

Pros: Like Option 2 you can be in control of what bills you pay and when. For energy, you can also top up when you want, and don't have to worry about getting into debt.

Cons: You won't get such good deals if you use the prepaid method. What's more no one wants to run to the shop to top up gas or electricity in the middle of winter!

What's right for you?

Choosing how to pay bills in the UK will depend very much on your situation and needs. At B贸, we're all about helping you find ways to live your best life and make choices about money which suit you best. Everyone is different, but the following three scenarios might be useful for deciding which approach is right for you:

  • Don't want to get into debt and know you have a steady income: Direct Debit may well be the way for you
  • Are confident you will be able to pay on time and want to try and cut costs: Pay on receipt could be the right choice
  • Don't have a regular income: A prepaid meter or payment card could suit you well

Last but not least, it's always a good idea to make sure you're not paying too much. Pay attention to how much you're being charged and consider switching suppliers - you might be able to save hundreds of pounds each year by simply moving to a different utility company - learn how in our blog.

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* If you have accounts with B贸 and NatWest, the maximum you would be able to claim across all accounts combined is 拢85,000.

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