You may have seen the words ‘debit’ and ‘credit’ on your utility bills, but aren’t sure exactly what they mean. It is important to understand all the terms on your energy bill in case you are in debt to the company. You probably also want to know if they owe you money! But what does it actually mean to be in credit and in debit?
Quick Overview
In debit means that you have used more energy than you have paid for. Whereas “in credit” means the opposite; you have paid for more energy than you have actually used. If you are in credit, you can put the money owed to you towards your next bill. If you are in debit, don’t panic. Contact your energy provider to see if you need to do anything.
What is a Utility Bill?
If you are wondering what counts as a utility bill, it is pretty simple. A utility bill is any money you pay towards a company for using essential services. These include things like water and energy, or gas and electricity (some people pay for energy separately and others pay for them together). Your provider will work out how much you owe them for these services and send you a bill, usually every month or quarter.
The Difference Between Debit and Credit
On your utility bill is a number called a balance. This number can either represent how much you are in debit or in credit, or it can have a balance of zero. Zero balance means that you don’t owe the company any money – your payments are all up to date. It also means that you haven’t overpaid, so the utility company doesn’t owe you money. Debit and credit are a little more complex than this.
Debit
If your balance is in debit, you have basically used more energy than you’ve paid for. There are a few possible reasons for this, so don’t panic – it might just be the way your utility bill is spread throughout the year.
For example, most people put the heating on in the winter but not in the summer. This means that they use more energy in the winter. In order to avoid paying more in the winter than in the summer, some people like to spread their payments out evenly. They pay the same amount each month and may find that their balance is in debit in, say, March. But this amount will be covered by their next few payments because they use less energy in the summer.
However, you might find that you are using more energy than your provider predicted you would use throughout the year. If you have a set bill, you could find yourself in a situation where you are in debit and the amount does not even out. Under these circumstances, you will need to pay off the balance that you are in debit by.
Credit
Being in credit on your utility bill means the opposite to being in debit – you have paid your provider more money than you needed to for the energy you have used.
Going back to our energy over the winter and summer months example, it is quite usual for people to be in credit around September time. When they put the heating on in the winter, they will still pay the same amount towards their energy bills that they usually do each month. The amount they are in credit for covers the extra energy they will use.
Note: It is similarly typical to be in credit with your water bill because water companies often ask for a years’ worth of water up front. You may be in credit until the end of the year.
What if the Company Miscalculated My Bill?
It is possible that your utility company has made a miscalculation and assumed that you would get through more of a utility than you end up using. This can happen if you have moved house and are using less energy, for example, than the previous occupants. In a case like this, you can put the amount in credit towards your next bill and enjoy not having to pay as much the next month. Under some circumstances, the utility company may need to give you a refund.
I Am in Credit, What Are My Options?
You may have a few options when your utility bill is in credit. It depends entirely on the circumstances and why you are in credit:
- If you are in credit because your bill balances out over the winter and summer months, you don’t need to do anything. Just carry on paying your bill as normal.
- If you are generally using less of a utility than you are paying for, your utility company should reduce your next bill for you. They may want to recalculate how much they are charging you and might ask you to take a meter reading or if they can come over to take one themselves.
- If you are moving house or utility provider and you are in credit when you close your account, you are entitled to a refund of the full amount.
How to Claim Money Back
Speak to your utility provider if you believe you are owed money from them. If they agree to refund you, they’ll tell you exactly how they are going to do so. But it will probably be sent to the bank account you pay your bills with. Doing it this way helps them ensure that the payment is going to you and not somebody else.
Even if the utility company dissolves, you are still legally entitled to a refund. Just make sure that you contact them as soon as you realise that you might be owed money from them. The longer you leave it, the more difficult it may be for them to figure out how much to pay you.
Quick tip: If your utility company doesn’t agree to a refund and you still believe they owe you money, speak to Citizens Advice. They will be able to advise you on whether you are entitled to a refund.
What Happens if I Miss Payments?
It is possible that you are in debit because you have missed one or more payments. In this case, you probably owe your utility company money and your bill will not even out over the year. Speak to your provider immediately and aim to pay off your debt as soon as you can, otherwise they can charge interest. If you ignore debt for a long period of time, the company can even take legal action against you.
What to Do if You are Struggling with Debt
Don’t worry if you are struggling with debt to your utility provider. There is help available, so try not to ignore the problem. That will just make matters worse.
The first step you can take is to contact the utility company. It is best that you pay the amount off straight away. But if you can’t afford this, ask them if they would be willing to work out a payment plan. You can seek help from Citizens Advice. They provide free, legal advice for people who are struggling with debt.
My Balance is Zero
It is great that your balance is zero – that means that you are on track with your bills. Keep doing exactly what you are doing. Remember to pay your bills on time, or set up a direct debit so that the money comes out of your account automatically.
Final Thoughts
Don’t just rely on your utility company to tell you about your bills because they can make mistakes. It is good to be sure that you fully understand the terms on your utility bills in order to be in the loop. This way you can keep an eye on whether you owe one of your providers money, or if you are overpaying.
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