Next month, it is extremely likely that bills in your household will rise.
More than 10million customers will see energy bills head north after all six of the Big Six firms announced they will raise tariffs in line with Ofgem’s price cap from April.
Mobile phone providers including EE, O2, Three, Virgin Mobile and Vodafone either have announced or will announce increases to customers’ tariffs in line with the Retail Prices Index of inflation.
Virgin Mobile also recently tacked on a non-inflation price rise.
Household bills are on the rise again from April – but you could get some money back on them with a little bit of work
On top of this, water bills, council tax, TV Licence and other telecoms costs are also set to rise from next month.
One way to help negate the impact of this slightly, can be to open a cashback current account solely for household bills.
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HOW THIS IS MONEY CAN HELP
Looking for a better bank? This is Money’s five of the best current accounts
Last week This is Money reported on Nationwide’s Simply Rewards scheme closing in April – which provided users with cashback at shops – and broke down some of the alternatives.
Some current accounts and credit cards offer cashback on purchases, but there are also bank accounts out there that will offer you cashback on your household bills when you pay them by direct debit.
But is it worth it to open one? This is Money decided to compare some of the offers based on what you might actually pay as a household, rather than what the banks advertise.
Switching service uSwitch put together a list of household bills based on average customer data.
We used this as a starting point to work out how much cashback you would expect to receive from some of the current accounts out there if you paid your bills with them.
Based on these averages, your bills would be £376.46 a month if you had a Sim-only deal, or £401.43 a month if you were paying for a tariff and handset deal at once.
We crunched them as separate totals assuming someone had only one mobile phone deal for the purpose of this article. So what could you save?
RBS Rewards Current Account
RBS’ Reward Current Account comes with a £2 monthly fee, and offers 2 per cent rewards – which can be traded for cashback or put towards gift cards or vouchers – on seven types of household bills if you pay them by direct debit.
Those bills are council tax, gas, electricity, mobile, landline, TV package and broadband.
How to do it:
Some people favour a ‘jam jar’ approach to their finances – including setting up separate bank accounts for different types of spending.
If you choose to open an account specifically to pay your bills with, then you need to set up a standing order that will automatically transfer money from your main account to your bills account – as well as the direct debits that will actually pay each bill.
This will require to pay attention and carefully manage your accounts to ensure you stay in credit and are putting enough in to cover your bills, but the reward could be worth it.
Bear in mind that the bank counts gas and electricity and landline and broadband each as separate bills.
Most of the time you’d expect to have a dual fuel tariff where you pay one bill for gas and electricity, and for your landline and broadband cost.
Therefore, for the purpose of our calculations you would only get cashback on five bills, rather than the seven advertised.
Based on our table, someone with a Sim-only tariff would net £6.39 a month in cashback before taking into account the £2 account fee, while someone paying a handset tariff would earn 50p more.
Over the course of one year, you could earn either £52.67 or £58.66 in cashback, after the £2 fee is taken into account.
The bank claims users can earn £59 in cashback after fees on bills of £345 a month, but that seems to treat gas, electricity, landline and broadband as four separate bills.
It’s also worth mentioning that RBS does currently offer a £150 switching bonus for customers that lasts until 8 March.
To get the cash, customers need to pay in £1,500 and log-in to their account online or in-app before 12 April. They will then receive that money by 10 May.
Santander 123 Current Accounts
The high street bank offers two different versions of its 123 Current Account – the standard version and the Lite.
Both give you the same offer when it comes to cashback, but the 123 Current Account’s fee is £5 a month compared to the Lite’s £1 monthly charge.
For that £4 extra you do get an interest rate of 1.5 per cent on balances of up to £20,000, but that’s less relevant if you’re looking for an account just to use to earn cashback on bills.
However, both accounts do require you to pay in £500 a month as well as having at least two active direct debits.
For that though you get up to three per cent cashback on household bills paid by direct debit each month.
You will get one per cent cashback on water and council tax bills, two per cent on gas and electricity bills, home and life insurance premiums taken out with the bank and three per cent on mobile and home phone bills, broadband and TV packages.
uSwitch included home insurance in its table and we will include it in our calculation but it will need to be with Santander for you to earn cashback on it.
Someone with a Sim-only tariff would earn £6.57 a month in cashback on both accounts, with someone paying a tariff with a handset would earn £7.32 a month.
This works out as 18p more than the RBS account in the case of a Sim-only deal, and 43p more in the case of a handset tariff.
After fees, over the course of a year someone using the 123 Current Account would earn only £18.83 or £27.81 in cashback, while someone using the 123 Lite Account would earn either £66.83 or £75.81.
Discounting the £150 switching bonus, this means you’d earn either £10.16 or £17.15 more a year in cashback by choosing Santander’s 123 Lite offer over RBS’ Reward account using average bills.
What are the other alternatives?
While these three accounts are the main ones which offer cashback specifically on household bills paid by direct debit, others do exist.
Lloyds Bank and Bank of Scotland offer a scheme called Everyday Offers that does allow customers to earn cashback on certain direct debits, with Halifax offering a similar scheme called Cashback Extra.
Lloyds told us that some household bills do allow you to earn cashback, and said in the past they’ve offered customers cashback on direct debits paid to British Gas, Sky TV and EE – even if they do not offer specific cashback accounts.
However, they didn’t provide a specific list of utility bill providers that customers could earn cashback with, nor the exact amount of cashback offered, so it makes it hard to analyse against RBS and Santander above.
Some credit cards also offer cashback on all your spending, not just household bills, but this is often a lower percentage.
For example, Tandem pays 0.5 per cent cashback on all spending over £1, while Barclaycard’s platinum cashback plus card gives you 0.25 per cent cashback on all spending until 2023 and a bonus £15 if you spend £1,500 in the first three months.