Consumers could save �187 a year by using direct debit

According to Bacs, the payment processing service, individual UK consumers could save �187 each year by paying bills by direct debit.

But Energywatch said some consumers lost through paying by direct debit.

The watchdog said some power firms were too slow to refund customers who have overpaid by direct debit.

Just over half of UK utility customers do not pay their bills by direct debit, Bacs said.

When customers overpay by direct debit the firms prefer to keep hold of the cash saying that they will reduce bills in future - but this often takes far too long Energywatch spokesman How to switch energy supplier

Switching to direct debit is often recommended by money-saving experts as a means of saving a few pounds each month.

Bacs said the biggest savings to be made are on gas and electricity bills.

The group claimed gas and electricity customers could save �105 a year by switching to direct debit.

Paying for other household items and services such as satellite TV, car breakdown cover and private medical insurance by direct debit could save consumers even more cash.

Slow refunds

But some consumers prefer to keep closer control over their finances, not trusting those with direct-debit access to their accounts to take out the correct amounts.

In April, Energywatch asked the industry regulator Ofgem to investigate if some power firms are too slow to refund customers who have overpaid by direct debit.

The watchdog said one in 10 of the 40,000 complaints it received about poor billing related to firms dragging their feet over refunds of direct debit overpayment.

"If customers underpay gas and electricity, firms are very quick to demand what they are owed.

"However, when customers overpay by direct debit the firms prefer to keep hold of the cash saying that they will reduce bills in future - but this often takes far too long," an Energywatch spokesman told BBC News.