BT increases charges from May 2007

From May 2007, BT will charge customers an extra £4.50 per quarter if they pay their bills by cash or cheque.

Late payment fees will also be increased from £5 to £7.50. Administration costs for processing cash or cheque payments are far higher than those for direct debit.

Karen Darby, founder of SimplySwitch.com, the price comparison and switching service, comments: “BT is clearly trying to cut the cost of its admin due to strong competition from rivals. It already gives a small discount to customers who receive paperless billing, so it’s a shame that it has chosen the stick, rather than the carrot, to target customers paying by cash or cheque.

“Instead of rewarding customers who switch to direct debit, BT has decided to penalise those that don’t. Around a quarter of BT’s customers, about 5.5 million, currently pay by cash or cheque, so unless people switch to direct debit and avoid the charges, BT could make up to £24.75 million per quarter. This is £99 million per year… a figure that will grow even higher when BT’s new late payment charges are taken into account.

“This is a ‘brave’ move by BT, a provider that is already one of the UK’s most expensive. Other companies have already undercut BT on both call prices and line rental. These punitive charges give customers yet another reason to leave and will undoubtedly push many people away. Nearly a third of BT’s customers have left them since their monopoly ended in the 1980’s.

“Switching to direct debit is generally a good idea, but customers who are unwilling or unable to pay this way shouldn’t have to put up with these charges. Switching phone companies is quick and easy and doesn’t involve changing phone number or having new phone lines installed. If customers are unhappy with these new penalties, they should hang up on BT and switch providers.”