British Gas to delay rise in direct debits for millions on standard tariffs over winter - but many could save £190/yr by switching
British Gas has announced it will keep direct debits for 2.3 million customers the same this winter, despite huge price hikes that'll hit next month. It says it will keep an extra £50 in customers' pockets – but most will likely be far better off switching.
Energy giant British Gas will freeze direct debit payments at their current level over the winter period for all customers on its standard variable tariffs. These tariffs are typically the most expensive ones – and if you've not switched in the last year, it's likely you're on one.
The firm made the move after confirming a typical £139/yr price rise for those on standard tariffs from Friday 1 October, in line with the new energy price cap. This will allow British Gas customers on its standard tariff to keep their monthly payments as they are now until at least February 2022.
But be aware it might not be right for everyone, as it could mean you'll build up debt on your account over the winter months, when we typically use more energy. What's more, the best way to save is usually to switch energy supplier, with savings of £190+/yr against the new price cap possible, based on typical use.
If you find choosing a new tariff confusing, try our free Pick Me A Tariff tools to find the cheapest deal based on your preferences, or you can do your own full-market comparison via our Cheap Energy Club.
Freezing direct debit increases isn't the same as freezing prices
It's important to note British Gas isn't freezing prices, it's only your monthly direct debit payment that will stay the same. That means if your current direct debit isn't enough to cover your energy usage over the high-use winter period, you could end up with a big deficit when the freeze ends.
In fact, British Gas will hike its standard prices by £139/yr for a typical household from October – the most allowed under regulator Ofgem's new price cap.
So while the direct debit freeze could offer some breathing space for those with financial troubles right now, you might just be racking up debt on your account. This could lead to much higher catch-up payments when the freeze ends. British Gas says it'll assess the market in February 2022 and decide how to adjust direct debits then (this is when the next price cap change is due to be announced).
What's more, if you have accrued debt, firms can stop you from switching until you've cleared the balance, which could cause difficulties, so it could be best to switch to a cheaper tariff now – you can use our Cheap Energy Club to do a whole of market comparison.
It's also important to note that this scheme doesn't help those who pay by cheque, or those on prepay meters (see our Cheap prepaid gas and electricity guide for ways to save).
I don't want to freeze my direct debit – how can I opt out?
British Gas says if you'd rather not defer your direct debit increase, you can alter it through its app or by contacting the firm directly. If you don't opt out, your direct debit will automatically be frozen, so take action if you don't want to risk racking up a significant debt on your account.
Struggling to pay your bill? There's lots of additional help available
Fortunately, there is more help available. Measures brought in to help people struggling with bills due to coronavirus are still ongoing. Most importantly, your supply won't be cut off – disconnections of standard credit meters have been suspended, while prepayment customers can get emergency or additional credit to ensure the lights stay on.
Suppliers can also offer full payment plan reviews, affordable debt repayment plans, payment breaks or reductions, allowing you more time to pay and access to hardship funds. This is all done on a case-by-case basis, so contact British Gas as soon as you can if you do start to struggle.
In August, British Gas was one of 26 suppliers to sign up to an industry commitment to reach out to those who most need help this winter. The commitments include a drive to raise awareness of the help available, to make it easier for customers in financial difficulties to get in touch, to improve bill accuracy and to step up smart meter installations for prepayment customers.
There are also a range of energy grants to help those on certain benefits with winter bills. For full info, see our Housing & Energy Grants guide, or check Ofgem's website for a full rundown of what's available and what to do if you're having difficulty paying.
What has British Gas said?
A British Gas spokesperson said: "We understand that the price cap increase comes at a very expensive time of year for some of our customers... Freezing direct debit payments until after winter will keep an extra £50 in customers pockets. We want to give our direct debit customers the option to create a bit of extra financial breathing space if they need it."