How much credit is recommended in energy account?

[Mablefly]

We have built up around £400 credit in our energy account.

We are paying £238 per month to bulb and the recommended payment is now £195. I’m not sure why they chose £238 as it doesn’t match their recommendations…

£400 credit seems on the high side to me but I can’t see any guidance. What do you think?

TIA X

What tariff are you on?
Its up to you if you want to leave it or run it down by decreasing your monthly payment. If you're on the variable rate then prices are predicted to rise by about 70% or thereabouts

I'd drop it to £195 if I were you, put the difference in another account so it's still building up. We have no idea what's going to happen with bulb, I know others have had issues with their credit balances being transferred over to a new supplier.

I had £350 in my account just before the prices rose. I asked for it back. I am sure the company would not allow me to have £350 debt on my account so the money is better off with me. I think they are very cheeky.

I’d leave it, we are more than half way through summer. That credit will be easily eaten up over the coming winter plus the prices rises in Oct and Jan.

It depends how much you can afford, we don't leave any, I prefer my money with me rather than with an energy company, I change my DD accordingly, savings accounts are only 1.5% but why would I give that to BG

Most companies expect you to build up 2 months average use in credit in case of a default or inability to pay, so it sounds like yours is about right or getting close to it.

Thanks for taking the time to reply. It’s a variable tarrif so like everyone else we are worried about the predicted rises.

I think I may leave it for this month then reduce to the recommended £195. We can then put the extra £40 aside elsewhere in case we need it for future energy bills. I am very cautious about running up a big bill in the coming months and like to have a cushion, but equally feel like I would rather save my own money than line their pockets!

If you are able to save and can cope with the DD increasing later if necessary then let them reduce the DD.

The companies have been told to make sure that DDs are the right amount so maybe yours doesn't need to be as high as it is now.

Don't forget you'll get £400 credit over winter to help with the increased cost.

DDs that are lower than they need to be will be more of a problem for people who see the money 'saved' as being available to spend on something else so they won't have a cushion if their DD increases to pay off a debt on but it doesn't sound like you'll be in this position.

Except EDF who refund you when you get over £100 in credit (therefore meaning there's no point in equal payments through the year).

I now have a savings account where my refunded money sits until needed.

I had that this week with EDF and it's really pissed me off! Refunded me £277 credit today when I was happy for it to stay there to help over winter! What is the point having a DD to cover the whole year when they refund credit from the summer 😡

Take it out and put it in a separate account to forget about it. Then when the energy prices go up you can use that money.

As interest rates are going up people are better to put it in their own savings accounts, when interest rates on savings were 0.1 % it didn't really matter but we could be looking at 2-3% in the winter for easy access account if interest rates go up

Why would you want to be in credit at all? As long as you put the funds into another account which you control, there is no need to be in credit at all unless you enjoy financing their business for free.

If it is in your account, you have the use of it.

And there is always the risk that they go under.

Because that's the supposed model which is offered with the 12 equal payments system. There's no point offering that system if you're going to refund the credit balance (and what EDF do is refund the balance, but then also claim you're not paying enough when your usage goes up in winter, and put the DD up, where if they'd just kept your money you wouldn't have gone into debit 🤷‍♀️).

I don't mind keeping it in savings though. But it just defeats the object, IMO.

I've been wondering this, octopus have let me get £300 credit so far. I want to build up a a bit more this summer to make winter less painful. I would get pennies interest on it in my account so its not worth my time taking the money back.

The point of direct debit is that it is easy to administer, it doesn't have to be equal payments, equal payments are usually standing order.

I leave it to build up. The interest is usually much more than you can get in a savings account. 5% at least.

Why have a credit balance at all?
Keep the money in your own bank account and pay the exact bills by variable DD each month.

I don't think that British Gas gives me any interest on my payments

Not all suppliers offer variable DD payments or interest on credit balances, although some charge slightly cheaper rates if you pay by DD so it probably amounts to the same thing.

In any case, many people probably prefer to pay the same amount each month, instead of winter bills that are nearly three times those in the summer, at an expensive time of year (the Octopus balance forecast estimates my December, January and February bills to total £866 and the June, July and August ones to be £330)

It works for a lot of people who aren't great with money. If it's in their energy account they won't spend it on other stuff then be screwed in winter.

@Mablefly everyone's situation is different. There's no single 'good' amount & there are many ways of looking at it. I only over pay mine a little, just enough that when the statement comes out & it doesn't show the last payment I made they still owe me money.

my friend over pays hers a lot, because she can't budget in her head(or on paper) & she'll just spend it if it's in her account.

another friend has a separate account that she transfers money into, she keeps a note book with the updated total and a list of things it's for

2x rent
4x electric
3x gas
3x council tax

type thing.

she has another account with a separate list
6x weeks food shop at £80
4x weeks petrol at £60
4x weeks school lunches for both kids.

and she tries to balance it up so she knows she has x amount of weeks/months bills in case she loses her job etc

Friend A couldn't do that, she'd just see the money & spend it!!

Another friend tries to budget & be careful, then her wanker of a DH spends it all on nights out with the lads & then shouts when there's no food or bills aren't paid. He's an abusive bastard & I hope next time she leaves she doesn't go back!!

you just need to know what works for you!!

I really don't understand all the handwringing online about credit balances and 'not letting them have my money' so putting it in a savings account instead.

I'm a few hundred quid in credit. I'm happy to let it sit in my energy account until used automatically. The credit interest I'd gain on it would be negligible, I see no point in withdrawing it only to have to pay it back at some point over winter.

Ovo is 5% interest on up to £1000 balance.

Bulb don't pay interest.

I've got 1000 in credit in mine. I meant to ask for it back but I kept forgetting (I was flush last year) but now I'm having to watch every penny I'm keeping it there. I'll use it over the winter and hope that these prices come down. I'm planning on using the heating 3 hours per day max and just hope we don't have a really cold snap.