How bill smoothing can help you

A Canstar Blue survey of 5000 Australian adults found that one in four electricity customers struggles to pay the bill on time. That number is likely to spike in winter in southern Australia and in summer in northern regions when heating and cooling drives costs even higher.

But sleepless nights might be averted by a strategy known as bill smoothing.

Financial comparison site Canstar describes bill smoothing as a way of paying smaller amounts more frequently, rather than paying one large bill a few times a year.

Canstar explains that there are two ways of doing this: a formal payment plan with the service provider or informally making more frequent payments on your own.

“With the formal bill smoothing structure, the provider creates a payment plan where you pay a portion of an estimated bill at regular intervals. It works by calculating the total estimated cost of your energy bills for the next 12 months and then splitting the amount into equal weekly, fortnightly or monthly payments,” Canstar says.

To calculate regular payments, your energy provider will look at your usage over 12 months and compare your bills to customers in your area with similar usage patterns. Rather than paying quarterly bills of varying amounts throughout the year, you would pay the same amount each week, fortnight or month.

If your actual usage is higher than your payments, you would receive an additional bill at the end of that quarter or year, or, if your usage is less than your payments, you would be “ahead” on your next bill.

Canstar says many energy retailers have a formal bill smoothing structure, including: AGL, Click Energy, Diamond Energy, Power Direct, Origin Energy and Red Energy.

It says some energy retailers are also offering “fixed cost” plans, which calculate a tailored monthly cost for customers based on how much energy they have used in the past and how they heat and cool their home.

If you receive benefits from Centrelink, you can use Centrepay to make regular payments from your benefits. You can easily set up regular payments through your monthly account for such bills as:

  • rent and mortgage payments
  • phone and internet bills
  • electricity, gas, and water
  • home services
  • rental payments
  • medical services.

How do you manage your bill payments? Would something like this help you? Or do you have any other suggestions to help our members avoid debt and pay bills on time?

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Written by Janelle Ward

Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.

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