What Does In Debit and In Credit Mean On Your Energy Bill
Confused by your gas and electricity bill?
If a bill has landed on your doormat (or in your inbox) and contains an unexpected (and unwelcome) surprise, then you may be wondering what exactly it all means.
In debit vs in credit
When your gas and electricity account is in debit, it means you owe your energy supplier money. You’ve used more energy than you have paid for.
On the opposite side of the spectrum, “in credit” means your account actually has accrued extra money – meaning the energy supplier owes you money. You’ve used less energy than you have paid for.
But before you panic about that “in debit” notice, or rush to demand your energy company repays you after that “in credit” statement, you’re going to want to read the rest of this article.
Energy bill debit meaning
If you have become confused by what “in debit” means on your energy bill statement then you’re not alone.
A YouGov survey found only half of people understand how their energy bill is actually calculated.
The confusion comes because we use the word debit in other ways when discussing our finances and so in this context you may be unsure if debit is positive or negative.
When it comes to your energy bill being in debit means you owe the energy firm money, but it’s not uncommon for this to happen and there are simple steps to take to sort this out.
What to do if your energy account is “in debit”
Energy prices are in a huge state of flux right now having soared sky high and now slowly (too slowly, I would say) being brought back down to earth.
And if you’ve just emerged from a bitterly cold winter then chances are you had the heating most days, and for longer than usual, in order to stay cosy at home.
However much in debit you are with your energy supplier, it’s important not to bury your head in the sand and work to address the issue right now.
Try these steps:
Submit a new reading
By submitting a new reading of your meter you can rule out whether the energy company has an inaccurate picture of your gas and electricity usage.
Bills are sometimes based on estimated readings, and these could well be wrong.
Ensure that your energy supplier has the latest reading to see if that makes any difference to your bill.
Of course this could well backfire, because if your readings are higher than your supplier’s estimates then you could end up with a bigger bill. So do bear that in mind.
Talk to your energy supplier
It’s quite normal to go into debit over the winter months when you are cranking up the heating or spending longer with it on.
However as you hit spring and the chill thaws your energy usage will decrease, and so you will spend less on energy.
This is where you may have a chance to “catch up” with the debit on your account, as your set monthly payments may cover the amount you owe during those cheaper summer months.
Discuss this with your energy supplier to see what they say and come to an agreement about the way forward.
Explore ways to pay
Speak to your energy company to explore ways you can get your account out of debit.
Many have support funds and systems in place to help you spread the costs of bills.
They can also direct you to ways you could pay through established help schemes such as the Warm Home Discount.
What to do if your energy bill is in credit
If you are in the happy position of having an energy bill that is in credit, that means your energy company actually owes you money.
But before you race to call them and demand they pay you the cash, first it’s important to note that it’s very common for your account to be in credit. This is particularly the case during the spring and summer months.
That’s because your use of heating goes down in that time, and therefore you use less energy and your bills reduce.
However in winter your energy usage goes up considerably, due to longer nights and colder temperatures.
So whatever credit you build in your account can be used to cover your costs over the winter months.
For this reason it’s worth thinking about whether your monthly direct debits will actually cover your bills over winter without that credit balance.
Your costs may well increase in the coming months, meaning your set direct debit isn’t quite enough.
If you decide you do want a refund of your credit then give your supplier a call, and be sure to submit a new meter reading.
Why is your energy bill in debit?
Energy companies that supply your gas and electricity will estimate how much energy you will use over the course of a year and combine that with the cost of energy Then they set you a monthly direct debit to cover your costs.
However it’s only an estimate. The amount your energy company has agreed you should pay each month does not mean that is the fixed annual price.
And even if you’re lucky enough to have found a great fixed price deal, that doesn’t mean your energy bill is a fixed figure, it just means the price you pay for each unit of energy is fixed. If you use more, you may well pay more than your monthly agreement, even on a fixed deal.
Your monthly direct debit sadly doesn’t give you unlimited usage on energy, you will pay for what you use.
So if when it comes time to review your balance and usage the energy supplier finds you used more than you paid for, you will be charged for the extra energy used and you owe that money.
That is what it means to be in debit.
Even if you are paying a monthly direct debit based on an estimate, there are a number of reasons why you may end up owing additional money to your energy supplier.
You are using more energy than estimated
The estimate your energy provider gave you could be inaccurate and the truth is you use more energy than they predicted you would use.
The wholesale cost of energy has increased
We’ve all seen big jumps in the cost of our energy bills in the last couple of years – ours has more than doubled!
This is because the price of wholesale energy has increased globally and the energy firms pass that cost on to the consumer.
In the UK the government has stepped in to provide some help to consumers, but that has merely meant the increase in costs has been slightly less painful. It hasn’t been able to shield customers completely.
So before you beat yourself up, remember that everyone is seeing an increase to their energy bills.
You have changed tariff
Another reason you may be paying more for your energy is that you recently changed tariff.
If you have just come off a sweet fixed price deal that was a total bargain then the reality of returning to a normal deal can be quite shocking.
You moved home recently
This means it can be difficult to predict your energy usage.
Therefore the direct debit you were asked to pay, based on estimates, is not enough to cover what you actually went on to use.
Your energy use habits have changed
A recent change in your lifestyle or habits may mean that you are now consuming more energy than previous years.
For example if you recently started working from home then you may well have the heating on for more hours in the day over winter than when you were heading out to the office all day.
If you recently welcomed a new baby then you may be putting the heating on more readily because you want to ensure the little one is comfortable.
There are a myriad of reasons why your energy usage may have gone up.
How to avoid going in debit in the future
There are a number of steps you can take to avoid your account falling into debit again.
Monitor your energy usage
You can do this by taking readings from your meter. It’s much easier if you have a smart meter as then you can monitor it from a display.
Once you become aware of your energy usage then you can take steps to cut back.
You may also like: Cheapest way to heat a room
Cut your energy usage
The good news is there is a huge number of ways to cut back on energy use, assuming you aren’t doing anything in this area already.
A few key ways are:
- Turn down your thermostat. Even one or two degrees can save you money.
- Avoid using your tumble dryer
- Wash clothes on a lower heat
- Draught-proof your home
- Check out my frugal living tips here for more ways to save money on energy bills and more household costs.
Submit regular meter readings
Keep your energy supplier up to date on your energy usage with accurate readings, so that they are not relying on an estimate.
This means your monthly direct debit will be set at a realistic rate and you can ensure you’re covering the costs of what you use.
Install a smart meter
Smart meters automatically send readings to your energy company. This means you won’t need to regularly phone them in or input them into your online account.
It means your energy supplier will be able to build up a more accurate picture of your energy usage, so if you are trying to reduce your bills this will ensure your efforts are being communicated efficiently.
