What’s the Smart Way To Pay for Utility Bills?
In a perfect world, you’d always pay your bills on time with money you’ve saved. But most of us live in the real world. If you ever get caught short, it’s important you don’t use expensive credit to plug the gap.
You can’t always control when a bill comes in or how much it is, but you CAN control how you pay for it. There are Smart Ways and Dumb Ways to pay.
Let’s say we’ve looked at the options on a $500 power bill: from Cash to Debit Cards, Pay Later, Credit Cards and Payday Loans.
Below you can see what the cost of each option is, and what the worst case scenario is after a year if you incur the maximum amount of late fees and/or interest.
|WAYS TO PAY||VERDICT||BEST CASE*||WORST CASE*|
Visa or Mastercard
|SMART||$503||$503||Get more info|
|SMART||$519||$579||Get more info|
|OK||$523||$613||Get more info|
|DUMB||$535||$706||Get more info|
|DUMB||$640||$840||Get more info|
* ‘Best case’ is the cost to you if the bill is paid off after 2 months. ‘Worst case’ is the total cost if the bill is still not paid off after 12 months, and you’ve incurred the maximum amount of fees and/or interest. Note that I have not included the annual credit card fee in the ‘worst case’ cost for credit cards.
The best way to pay for anything is with cash you’ve saved. There’s no interest or fees ever, and you’re 100% in control. So put aside some of your pay cheque each month for bills: most banks will even let you create a separate account for free and you can automatically transfer some of your pay there each time. Create another one for shopping, one for emergencies and so on. It’s called the ‘bucket strategy’ or ‘envelope strategy’, because in the old days people used to divvy their pay up into different envelopes to help make it go further.
Some of us just aren’t cut out for budgeting, or we’re too busy or bored by it. So there are now apps and businesses that will manage your bills, in exchange for a fee. Here are two examples:
Take a pic of a bill and upload it to the app and they will pay it on time. Then you pay them back in four fortnightly payments. No late fees, just a $5.99/mth fee when you have a balance outstanding (up to $2000). It spreads the cost of big quarterly bills while avoiding late fees and taking advantage of pay-on-time discounts.
Creates an account in your name and you put your pay into it. Then they divvy it up, pay your bills and send you what you need to cover various other expenses in a personal budget you’ve agreed to at the initial free consultation. But after that it’s not cheap: an establishment fee of $700-$1500, paid off over 6 months, plus an average $30-$40/week administration fee.
👉 PRO TIP: WHAT IF YOU CAN’T PAY A BILL?
The golden rule when you’re in trouble is: do not ignore the letters from your retailer seeking payment. Do the opposite and CONTACT THEM because you need to get onto your retailer’s hardship program ASAP. Why? It brings extra protections. For example, every energy retailer is required by law to have a hardship program and once you’re on it:
- They won’t disconnect you if you stick to it
- They won’t send debt collectors after you if you stick to it, and
- Many will help you access government concessions and rebates
You need to shop around every year or two because most plans expire after 12 months and might not be cheap anymore. Switching your energy provider is easy: it takes about five minutes to fill out the form and you can sometimes save hundreds of dollars a year. There are two places you can look to find the cheapest deals around:
1. People Power Clubs
Groups like One Big Switch and 9Saver use the combined buying power of hundreds of thousands of members to negotiate exclusive or special offers that might not appear on retailers’ or government websites. They helped create this website and they’re FREE to join: you just give an email address and postcode.
One Big Switch www.onebigswitch.com.au
👉 PRO TIP: SPECIAL DEALS NOW LIVE
One Big Switch currently has special electricity and gas deals from Origin that are Origin’s best generally available offers and are also the cheapest (in 8 zones) or equal-cheapest (in 4 zones) deals from Origin that One Big Switch has unlocked in more than a year.
NOW LIVE: Origin Energy deals for One Big Switch members
2. Government comparison websites
In the states and territories where you can switch energy suppliers (NSW, VIC, SA, SEQLD, ACT), there are good FREE government sites that easily compare generally available offers for you.
NSW Energy Switch – NSW only
Victorian Energy Compare – VIC only
Energy Made Easy – NSW, SA, SEQLD, ACT
There are dozens of providers and hundreds of deals, but it doesn’t need to take hours of hunting to find the cheapest plan. Start with these two leading telco websites, where the experts have done the hard work for you.
Australia’s most comprehensive telco comparison website helps over a million Aussies a month to find a deal. Just select ‘Mobile’ or ‘Broadband’ at the top, then check out the current special offers on the first page or enter your search criteria and you’ll see dozens of results.
NB: The first few results will be sponsored, so scroll down slightly to see the cheapest options.
Mobile is one of the simplest products to switch: it’s free and you can take your number with you. ALL carriers work on the same 3 networks, owned by Telstra, Optus and Vodafone/TPG.
Broadband is also pretty easy to compare and switch. For example, most NBN plans fall into one of the set categories: Basic, Standard, Fast or Superfast.
- OzBargain Forums
Australia’s biggest bargain hunters forum is very tech-focussed and has dedicated deals sections for both Mobile and Internet. Community members post deals they’ve spotted and others then vote them up or down so you can see the most popular offers right now. It takes a bit of getting used to, but there aren’t many killer deals that go unnoticed by these self-made experts.
Any information is general advice, it does not take into account your individual circumstances, objectives, financial situation or needs.
Check KILL BILLS for more helpful tips about saving.