British households are missing out on more than £12 million in interest every month because energy suppliers are hoarding billions of pounds of deposits from their customers.
According to data from Ofgem, the energy giants were on £3.7bn of the millions of customers whose accounts are in credit last year.
As a result, energy customers in the UK missed out on around £148 million in interest last year.
The average household with credit had a balance of £252 in 2023, meaning customers could have earned £10.08 each if their money was in the bank.
Struggling Brits who have used credit cards to make ends meet during the cost of living crisis will have to pay interest of as much as £60 a year to access an equivalent amount.
The majority of customers pay for energy by direct debit and pay the same amount every month – on average £141 for a UK household. However, energy consumption is seasonal.
This means that households build up credit during the summer months, when they use less energy, and then use the credit during the winter months, when consumption is typically higher.
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AI money-saving tool for households Nous.co is now urging bill payers to demand repayment of the large balances they have built up on their utility bills so they can reduce their debt and start earning the interest themselves.
Nous experts suggest that if your credit balance in the month of May is more than two-thirds of what you usually pay each month, you are probably paying more than necessary and you should ask for a refund or instruct your energy supplier to cover the costs to lower. your direct debit.
May is the time of year when most households should have the least amount of credit, after using up the surplus over the winter.
Under the new Ofgem price cap coming into effect from April 1, the average dual-fuel household paying by direct debit will spend £1,690 a year on energy, up from £1,928 in the previous quarter. This amounts to a decrease of approximately 12%.
Greg Marsh, household finance expert and CEO of household money-saving tool Nous.co, said: ‘No one should be left with a large balance on their energy bills at the moment.
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‘If you do that, you miss out on the interest you could earn if you put that money in a savings account.
‘Most suppliers will not automatically refund you if you have overpaid, and may unfairly hold on to the money you still owe.
“Energy companies know how difficult it is to stay on top of these issues, and hope we will continue to pay more than necessary.
“That’s exactly why we started Nous – to take on the burden of staying on top of things and help people avoid falling victim to these pitfalls.
‘This week we helped a customer recover almost £500 in credit after months of overpaying.’
Mr Marsh shared the following tips to prevent energy companies from hoarding your money:
You are currently owed no more than two-thirds of your monthly bill
If your balance in May is more than two-thirds of what you pay each month, you should ask your supplier for a refund. If you are significantly above that level, your collection level is probably set too high and you can ask your supplier to lower it.
May is the perfect time to request a refund
The majority of households pay their energy bills by direct debit and are charged the same amount every month. As a result, most of us build credit in the summer and use it in the winter, when our consumption is higher. Early May is the time when you must have minimum credit. You used up the balance over the winter and are about to rebuild it. So if you’ve been building credit, now is the perfect time to get back any money you owe.
Provide your meter readings regularly
Do you not have a working smart meter? Then make sure that you regularly send the meter readings to your supplier. This means they have accurate information about how much energy you use at different times of the year. Failure to do this means your supplier will overestimate your usage, potentially leaving you with too much credit – or debt.
Don’t forget about direct debit
If you think your direct debit is too high, don’t skip it altogether. It is the cheapest way to pay for energy. Customers who pay with standard credit – cash or check – currently pay an average of £106 per year more than direct debit customers.
Beware of cheap fixed energy deals
Fixed energy deals are starting to come back onto the market, but most don’t offer good value for money. A solution that looks cheap compared to what you pay now could easily end up costing you more in the coming year. Wholesale energy prices are still volatile and could fall further. Unless you really value certainty, you’ll fix it too quickly and risk being locked into an expensive contract.
Most households can save without repairing
Most households currently no longer have a contract and can save by switching providers at Nous. The majority can save the best part of £150 on their energy bills without having to commit to a permanent contract.