If you’ve ever gone over budget due to a utility bill larger than expected, you may want to consider budget billing.
Find out what happens if the company underestimates
Check if you will incur extra charges if you use more energy than planned. Typically, these excess charges are due at the end of the year with no notice. So if you decide to enroll in budget billing, check if you will owe money if you exceed the limits. If the answer is yes, make sure to save some extra cash in December to cover that.
Look at the monthly fees
Examine all administrative fees associated with the service. Many companies may charge a monthly fee. Fees can vary from one company to another, but anything above $2-3/month is likely too much. Remember, the company is simply giving you an average monthly payment. It probably is not saving you any money and is not something that warrants a high monthly fee.
Read your contract carefully
Consider the contract you signed. When you do this, you are committing for at least a year. There may be issues if you have to move. You should carefully consider the expectations regarding this.
Create your own budget billing system
Think about doing it yourself, without fees, contracts, or hassle. You could even plan the amount they suggested. Then, transfer the extra amount from the lower consumption months to cover the months when you consume more energy. This will help you with financial planning without spending money on administrative fees. You can do this in any category where your monthly spending varies. Divide the amount you spent over the past year by 12 or plan the highest amount you spent last year for each month and then put the extra amount into savings or your debt repayment plan.
Make your decision carefully and monitor your bill
Like any contract, it is important to fully understand what you are signing up for. There are advantages to knowing exactly what you will pay each month, so it may be worth the extra cost.
If you enroll in budget billing, you may be tempted to simply pay the monthly bill and stop worrying about it altogether. However, you might be hit with a hefty bill at the end of the year. For this reason, you should monitor your energy usage throughout the year to ensure you stay within the estimated usage limits, especially as you approach the end of your contract. And if you’re worried about the costs of your utility bills, you can work on reducing them, such as preparing your home for winter.
Updated by Rachel Morgan Cotero.
Source: https://www.thebalancemoney.com/what-is-budget-billing-2385943
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