While buying a new car from a garage with cash may secure you a discount, a recent report by Channel 4 Dispatches has revealed that customers who pay their utility bills by cash are being charged £100 a year more than those that pay by direct debit.

Although the majority of customers now pay their bills by direct debit, there are well over one million estimated households who still do not, especially the elderly. A good proportion of customers still prefer the discipline of receiving their quarterly bill, checking it and then paying, either in person at the Post Office, by a cheque through the post or by transferring cash electronically.

The cost benefits associated with ‘pay as you go’ facilities for gas and electricity are that customers don’t end up overpaying for their monthly usage as can be the case with direct debits. For some it is a question of trust – they dislike the idea of giving outside companies access to their bank accounts.

The data has been published at a time when more consumers are paying for household essentials with cash in a bid to keep on top of their finances. While separate figures showed that last year a record amount of money was withdrawn from cash point machines, the first time there had been an increase for four years.

According to the research, those that resist this move to contactless payments will end up paying more. Experts have expressed concerns that banks, credit card companies and large retail and utility companies are attempting to slowly force consumers away from cash payments towards electronic ones.

Richard Lloyd, director at the watchdog Which?, was quoted in The Telegraph as having said: “It’s clearly cheaper to do it electronically. It’s not what everyone chooses though, and I think as the industry develops these systems they’ve got to keep in mind the people that either can’t or won’t use the modern new payment systems in that way.”

So is Britain being led to be a cashless society? It’s quite salutary to see how much you spend in a day or over a weekend – using cash reminds you precisely where your money is going. However, there is also something to be said for using direct debit: convenience and the ability to spread costs.

Let us know your thoughts…