Paying for energy by cash or cheque

The method of paying energy bills has changed as the internet has developed, with many transactions now handled electronically.

However, for those that prefer a more traditional approach, it is still possible to pay by cash or cheque and here’s a guide to doing just that.

We aim to highlight the options available so that you can decide which way of paying your energy supplier is best for you.

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1. How you can pay for energy by cash or cheque
2. What rules do you need to consider
3. Disadvantages of this method to be aware of
4. Direct debit, standing orders and prepayment meters
5. How do I switch payment methods?

1. How you can pay for energy by cash or cheque

Cash and cheque payments are usually available from most energy suppliers.

Your payment for energy usage can be made by either sending a cheque directly to your energy supplier, or by paying it via your bank or local post office.

Those wishing to pay by cash for their gas and electricity must do so in person in one of these locations.

2. What rules do you need to consider?

The key thing to remember is to ensure that you leave enough time to submit the cash or cheque payment in order to avoid late-payments.

When paying by cheque via post it will take some time to arrive at its destination, while a bank or building society might charge you a specific fee if you pay for your energy bills by cash. It’s important to ask if you have concerns that this might be the case.

3. Disadvantages of this method to be aware of

While paying by cash or cheque can be a great way to monitor your spending and it is possible to challenge any incorrect fees, it is not without its disadvantages.

Paying by direct debit can mean you’re eligible for a ‘prompt payment’ discount as your gas and electricity supplier will know they are guaranteed payment.

In the same way, paying bills online can mean you are eligible for a paperless discount as there is no need for your energy supplier to send out bills.

However, the main disadvantage is in terms of cost. Energy companies can charge cash and cheque customers a premium on both their standing charge and unit rates.

Energy supplies argue that this is done to compensate for the costs of processing these kinds of payment and the risk of underpayment.

4. Direct debit, standing orders and prepayment meters

Direct Debit is usually the cheapest option when it comes to paying for your gas and electricity, whereby the supplier automatically deducts a certain amount from your account.

Although you cannot check your bill before paying, the fact that you can guarantee payment means suppliers will offer a discount on the rates they offer.

If there is an error in the payment you are entitled to a refund under the Direct Debit Guarantee and the supplier must inform you in advance if they wish to alter the amount due or the payment date.

Direct Debit payments can be made on a monthly, quarterly or variable basis while it is possible to build up credit during the warmer months and debt when it is colder.

An alternative would be to set up a standing order – similar to a Direct Debit as you authorise money to be taken from your account, although only you can change what comes out and when.

However, energy suppliers tend not to offer this method of payment on new tariffs due to the lack of guarantees associated with this method of payment.

If you would like more control over paying with a credit or debit card, then paying your energy bill over the phone or online is an option – that way you can check your bill prior to making any payments.

The last option comes in the form of prepayment meters, which require a meter to be installed in your home which is topped up via a key or swipe card.

Although this can seem like a good idea, they can be expensive to run and somewhat difficult to get rid of. There is also a danger that your could be left without power if you don’t top up the meter sufficiently.

5. How do I switch payment methods?

If you have a prepayment meter it is more difficult to switch, but changing from any other method of payment is straightforward.

Contact your energy supplier and enquire about the benefits of changing – you should then get the lowdown on cheaper alternatives.