Householders are wasting £13.7 billion each year by continuing to pay out-of-date Direct Debits they no longer need, a report has revealed.
On average, people who could be paying unnecessary Direct Debits lose around £70 per month, rising to £97 per month, or £1,169 per year for 18- to 34-year olds.
The study, by Moneysupermarket.com, revealed that half of Direct Debit users do not know exactly how many automatic payments they have set up.
One in five found they are still handing over money for utility bills, while 17 per cent pay for a needless mobile phone contract and 16 per cent for insurance.
Again, 18- to 34-year-olds appear to be paying out more than others for things they no longer need, with a quarter still paying an unrequired mobile phone contract, and 12 per cent paying for a gym membership.
In contrast, 12 per cent of over 55s continue to pay for an unused mobile phone contract, and just 1 per cent for a gym membership, although over one in five still have automatic payments set up for unnecessary utility bills.
“Direct Debits are an easy and convenient way to make payments for household bills, subscriptions and memberships for the majority of bank account holders in the UK,” said Kevin Mountford, head of banking at MoneySuperMarket. “Households face a huge number of outgoings which they may lose track of, therefore an automatic payment can help to keep on top of managing bills and avoid the issue of missing payments and accruing charges and fines.
“However, consumers must be proactive and manage their own finances to ensure they are not throwing money down the drain by paying Direct Debits they no longer use, especially at a time when many household finances are still under pressure. A relatively small monthly payment soon adds up to a lot of money and there is just no excuse to let these lie. You should have a clear idea of what is coming in and going out of your account each month – spend five minutes looking at statements and identifying any mysterious payments you don’t recognise. You should also consider payments such as unused gym memberships or annual subscriptions, as this could shave excess pounds off your monthly outgoings.”
Jane Tully, spokeswoman or Money Advice Trust Scotland, said: “Direct Debits can be a sensible way to budget and are used by millions of households to manage regular bills and outgoings. It’s straight-forward, convenient and reliable.
“However, it’s incredibly easy for consumers to forget about Direct Debits, especially as they increase the number regular payments they make. This results in inevitable waste, and less money in people’s pocket.
“For consumers who are not getting money into their account on a regular basis, it’s all the more important to stay on top of Direct Debits as the potential for missed payments and as resulting charges can be huge. In these instances, the cost may quite literally outweigh the benefit.”