Payment terms and obligations

It is crucial that when paying for bills and signing a new contract with a provider, you are aware of what your contract states as well as knowing what your payment terms are. These are detailed in your contract, and in this article, we are going to run through what payment terms are as well as other obligating details in a contract.

So, what are the typical payment methods you can use?

  • Direct debit: This is automatically linked to your bank and will come out depending on what the amount is that you owe. This is a common way of paying for bills as it avoids late payments and means that you do not have to worry about manually paying.
  • Prepaid card: This is a card that you can load with money and will supply you with energy until the amount on the card is used. This is an older method of paying for energy, as when the card runs out, the energy will cut out in the house.
  • Manual payment: This can be done either on the phone or via cheque; again using a cheque is a dated way of paying. Over the phone, you can manually pay if you do not want to do the direct debit method.
  • Online services: This is another way of manually paying without the fuss of calling up or sending a cheque. You simply log in, select the bill you want to pay and choose whether you want to stagger the payments or pay off the balance in full.

What are obligating details in my contract?

The details that you will have in your contract legally tie you to your energy provider, mostly for payment details as well as extra charges associated with the plan you are on. Some of the areas covered in your contract as an obligation may be as follows:

  • Late fees: When you sign a contract with your provider, you are complying that if you are late on a payment, that you are liable to be charged a fee. This can vary depending on who your provider is, as it could be a flat fee or a percentage of what you owe. In some circumstances, your provider may waive these fees on a one-off, but as a rule of thumb, these are important to look at on your contract as you could end up incurring extra charges.
  • Exit fees: If you are on a fixed plan, there will be detail in your contract on how much your fee will be to exit. There will be certain clauses to pay attention to, such as when the exit fee will expire. This will vary depending on the provider.
  • Discounts: Pay on time discounts are still offered by some providers, and there should be details of this in your contract if you are on that type of plan.
  • Switch in tariff: Once your plan has run out, the provider has the right to switch you on the standard tariff, which is higher than an original plan you would have signed up for. Make sure you check exactly when that switch happens, as you want to avoid paying the higher tariff.

We hope these payment terms and obligations have helped you, and make sure if in doubt, a price comparison website can help clarify whether you are getting the best energy deal!

Author: Claire Stapley
Claire Stapley is's Energy Editor, based in Melbourne Australia. Claire is a founding member of News and Energy Team.