Reading your bills and paying them quickly can make it easier to stay on top of your finances and avoid debts escalating. But if your bills are filled with confusing terms, it can be difficult to figure out where you’re up to.
For example, what does ‘in credit’ mean? What about ‘in debit’? These terms are often found on energy bills but can sometimes cause confusion. If you’re unsure what they mean, don’t worry because you’re certainly not alone. Here’s a quick breakdown.
When you see the words ‘in credit’ on your bills, this means you’ve paid more money than you needed to and the company owes you money. It’s most commonly found on utility bills for electricity and gas.
Building up credit on an account is very common and it’s not something you need to worry about. People often build up credit when they pay a set amount each month but use less energy than they’ve paid for.
If you’re seeing the words ‘in credit’ on your bills, you have a few options. You can keep your payments as they are to build up more credit, you can adjust your payments so you pay less in future, or you can request a refund.
If your bills are showing as in credit, you’re entitled to request an energy bill refund.
You can claim credit back at any time, but in the lead up to winter it’s often a good idea to leave some money on your account to cover your increased usage during the colder months.
For example, you might typically pay £80 a month for your energy but only use around £50 of energy each month during the spring and summer. During winter, your bills could rise to £110. Rather than requesting a refund on the extra money you paid during summer, you could leave the difference on your account to cover your bills during the colder months.
Before claiming money back, think about whether your bills are likely to increase in the months ahead and whether you’ll have problems making the payments using your income.
Some energy providers offer small rewards for being in credit, so it’s worth looking into whether your supplier does this.
If your bill says you’re ‘in debit’, this means you owe your supplier money. Try not to panic because it’s very common for this to happen. It can usually be rectified by making a one-off top up or by paying extra next time.
You might be in debit to your supplier because your usage shot up unexpectedly.
If you haven’t been submitting regular meter readings, this could be another possibility. Regular meter readings help providers give their customers accurate bills. Without these readings, they have to estimate your usage.
Sometimes, a provider might estimate your usage for a number of months only to then get a real reading that shows their previous predictions were inaccurate.
For example, your supplier might have estimated that you use £50 of energy a month. If you’ve actually been using £100 of energy a month, this can lead to a backlog. You will need to pay for this usage eventually, even if it feels like you’re beating the system in the short term.
Thankfully, energy suppliers are usually understanding. Most of the time, they’ll let you pay the money gradually. You won’t be hit with a big bill that needs to be paid in the next few days.
You can switch from one supplier to another even if you’re in credit.
Any existing credit on your account will be considered your ‘closed account balance’ and this will be reflected on your final bill.
Your supplier will take one final meter reading to determine how much of your final payment can be taken from your credit and how much needs to be refunded to you.
The money you’re owed will normally be refunded within a matter of weeks.
You can usually switch suppliers if you’re in debit, but there are a few exceptions.
If you’ve been in debt to your supplier for more than 28 days or you owe more than £500 on a prepayment meter, you may need to pay the money you owe before you can switch.
Get in touch with your energy supplier for more information.
Switching used to be a smart way to save money on your energy bills and get a better deal, but at the time of writing this (November 2021), most people are better off staying with their current provider.
This is because the wholesale cost of energy has risen dramatically in recent months and many suppliers have withdrawn their best deals from the market. Rather than switching and locking into a deal which could be more expensive in the long run, it’s probably better to stay with your current supplier and switch when cheaper deals become available
If you’re struggling to pay your bills, there may be help available. Here are a few potential options.
You may be entitled to £140 off your electricity bill or a £140 voucher for your prepayment meter for winter 2021 to 2022, thanks to the Warm Home Discount Scheme. To be eligible, you need to either be a low income earner or be getting the guarantee credit part of Pension Credit.
Cold Weather Payments are one-off payments designed to help people pay for extra heating costs when it’s very cold. You’ll receive a payment every time the temperature drops below a specified level for a set period of time. You’ll only be eligible if you already get Pension Credit, Income Support, income-based Jobseeker’s allowance, income-related Employment and Support Allowance or Universal Credit.
If you’re in debt to your energy provider, there are grants available that could help you pay it off. Visit Citizens Advice for the full list and more information.
If you were born on or before 26th September 1955, you should usually be eligible for The Winter Fuel Payment. This is an annual one-off payment to help you pay for heating during winter. You can claim it via the government website.