‘Cash payments’ and paper bills

Consumers could save a staggering £237 million a year by simply changing the way they handle their phone bills, reveals uSwitch.com, the independent price comparison and switching service.

The new study highlights the exorbitant amount that the nation is wasting through additional charges or lost discounts. Opting to pay bills by direct debit could save consumers £75 million a year and receiving a bill via email instead of by post could save us £162 million. Despite this, over 13 million consumers are paying over the odds for their home phone, irrespective of how many calls they make.

In May 2007, BT announced an £18 annual charge for any customer paying by cash, cheque, credit or debit card. Nearly a year on, 1 in 5 of its customers (18%) – almost 3 million – are still opting to pay by a method other than direct debit, bringing in an additional £52 million for the company. In similar fashion, 1 in 10 Virgin Media customers (9%) – some 400,000 – are prepared to spend £60 a year to avoid paying by direct debit, resulting in a further £22 million going down the drain. In total uSwitch estimates that 3.4 million consumers opt against paying by direct debit in the UK, wasting £75 million.

35% of Post Office customers, 18% of BT customers and 9% of Virgin Media customers could save by paying by direct debit

84% of Virgin Media customers and 59% of BT customers could save by receiving an electronic bill

Source: YouGov for uSwitch.com

The second pitfall faced by 13 million households is opting to receive a home phone bill through the post rather than electronically – resulting in lost savings of £162 million. From April, 6 out of 10 BT customers (59%) will pay £15 a year more to receive a paper bill at a collective cost of £141 million. Tiscali-owned Toucan also charges a £12 annual fee for customers requesting a paper bill, while Virgin Media offers customers who receive electronic bills a £6 a year e-billing discount. With 84% of Virgin Media customers currently receiving a paper bill – some 3.4 million – a further £21 million could be saved.

Steve Weller, Head of Communications Services, at uSwitch.com comments: “Some would argue that the additional charges imposed on customers not wishing to pay by direct debit are an unfair penalty. However, some companies, such as Pipex and TalkTalk, do not even give customers the luxury of having a choice – it’s direct debit or direct debit.

“With charges as high as £60 a year, customers should seriously consider whether they wish to continue settling their bills by cash, cheque or card. If they do, they could still cut costs by moving to a company that offers cheaper line rental – Toucan’s £8.99 a month line rental (plus £2 non-direct debit fee) is £27 a year cheaper than BT and £60 a year cheaper than Virgin Media.

“It would be interesting to see whether the costs incurred by the companies for providing paper billing are proportionate to the excessive charges being levied on customers. While there are clear environmental benefits to receiving bills electronically, only half of the UK has broadband at home and those that don’t are likely to rely on the postal service to receive their bills. Our advice to the 13 million customers being stung by these fees is to compare prices among all the providers to find the best deal for their needs – some companies will still post bills for free.”