Home Insurance Costs UK Billions On Direct Debit

Those of us who have a car dread the yearly renewal of our insurance policy. It's endless checking and rechecking of details and working out which is right for us. However, it is worth doing as it could be saving us pounds every year. Unfortunately we spend all that time getting the right policy for the right price then we go and add another premium on top by opting to pay by direct debit.

The UK is overspending on insurance to the sum of £2.7 billion every year because companies are charging for the privilege of direct debits, says new research.

The research for a financial advisory company found that nearly 20 billion home insurance policy holders and almost 19 billion car insurance holders choose to pay with direct debit. This equates to almost half of all home insurance policies and more than four of every five motor insurance policies charging customers for the convenience of spreading their costs.

"Opting to pay by direct debit seems a good way of spreading the cost of your annual motor or home insurance premium," said a director for the firm.

"However, people should bear in mind that some insurers believe they are making a loan to customers when they let them pay by this method. It may be that some people are better off paying for their insurance in a lump sum or even using a low-interest credit card, which you can pay off at a lower rate than the one on offer at your insurer."

Consumers pay by direct debit because it is convenient, stress free and paperless which is a concern for more and more of us. And it’s more than just insurance where we like to spread the cost items such as magazines, gym membership, energy/utilities, home phone, broadband, council tax and credit cards.

If you would like to know more about insurance why not ask AnswerBank Insurance.