Martin Lewis tells EDF, British Gas, E.on, Octopus customers this is the time to ‘get your money back in your pockets’

Martin Lewis has said that many people who pay their energy bills by direct debit need to take action now – if they are currently in credit. Speaking on his BBC podcast the personal finance expert said customers have reached the key moment of the year to know whether they should ask for any credit to be paid back from suppliers including EDF, British Gas, E.on, Octopus, Sainsbury’s and Outfox the Market.

He said that this is the ‘perfect point’ for people to ‘get that money in your pocket’, because they can know now if they’re just allowing their money to sit in the accounts of the energy supplier. May is the point of the year where accounts should in theory be at about zero in terms of debt or credit – meaning if you’ve got money in there it’s time to get it.

Mr Lewis explained how the direct debit cycle works and when people’s accounts will go into credit and debt: “The way monthly direct debit works is they take what it is estimated you’ll pay across the year and you pay the same amount each month even though you use more in the winter and we use less in the summer but it smooths out that usage.

“So whether you’re in debt or you’re in credit depends on where in the cycle you are. Let me give you what the cycle will be roughly for someone who started with that company in January.”

The financial exprt said that due to the colder months naturally involving more use of energy so costing more: “As we go from January thorough to March you would start to be more and more in debt. It would bottom out roughly at the end of April, early May, in other words today – this is the bottom and this is when you would expect to owe your energy firm the most which is roughly if you started in January one and a half months of direct debit.

“So if your direct debit is £200, you’re probably owing £330 if you started in January. From this point onwards you start to repay that debt. It goes up, it goes up and you probably get to zero on September. And then your maximum credit is November – six months from now.” He reckoned by that point people would probably be one month in credit.”

He said: “The real point is that right now assuming you’ve done a meter reading and everything is up to date you are at the bottom of this direct debit cycle. Now that’s interesting for a number of reasons.

“It means if you’re a month, a month and a half, two months in debt right now it’s not that big a deal as you would expect to be in debt. It means if you’re in credit right now – one month, two months, three months in credit then you are too much in credit.

“Because the best case scenario at this point is you shouldn’t have any credit. In many cases you should be in debt.

“But if you’re in credit at this point in the year this is the time you get in touch with them and say ‘hey this is the bottom of the direct debit cycle, there’s no way I should be in credit right now and I’d like you to give me that credit back please.” Leaving a bit of money with them – say about half a month’s payments might be a good idea, he suggested. “But if you’re two, three, four, five months direct debit in credit right now – too much get that money in your pocket. Stop them earning the interest – they have billions of pounds in cash earning interest on when that is our money. If you’re in credit, get your credit back right now – this is the perfect point in the direct debit cycle for doing that.”