30th June 2014
Britons are throwing away a massive £13.7bn every year as a result of not cancelling direct debits for goods and services they no longer use.
According to research by comparison site, MoneySuperMarket, some with 89% of UK adults using direct debits and on average, people pay out £311 each every month with a quarter, at 26% forking out over £500 a month. When it comes to goods or services users continue to pay for but no longer need or use, the cash is typically wasted on the likes of utility bills, needless mobile phone contracts, unused gym memberships and insurance policies.
But half of direct debit users confess to not knowing exactly how many automatic payments they have set up, with 7% – or 3.6m people – thinking they are currently paying for unnecessary bills. This figure more than doubles to a fifth at 18%, among 18 to 34 year olds.
The analysis also reveals that on average, people who could be paying unnecessary direct debits do so to the tune of £70 per month – a staggering £13.7 bn.
But this rises to £97 per month, or £1,169 per year, for 18 to 34 year olds with the over 55s being the most financially aware age group, though this group still pays an unnecessary £24 per month. London is the worst region for neglecting to manage redundant direct debits, with residents paying £135 per month in forgotten payments. This adds up to a huge £1,620 per year.
Again, 18 to 34 year olds appear to be paying out more than others for things they no longer need, with a quarter, at 25% still paying an unrequired mobile phone contract, and 12 per cent paying for a gym membership.
Kevin Mountford, head of banking at MoneySuperMarket says: “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.”