UK households underestimate the annual cost of bills

UK households underestimate the annual cost of bills by £2,500 or 63% – mostly thanks to expensive TV and broadband deals

Households in Britain misjudge the amount of money they spend on bills by more than £2,500 each year, particularly on TV and broadband packages, which can cost double what people usually believe.

The amount spent by households on utility bills, council tax, broadband, TV and phone bills last year was on average just below £4,000, according to the most recent ONS Living Costs and Food Survey.

However, a recent survey shows the average Brit believes they spent £1,459 on bills last year, which is £2,528 less than the actual figure.

Households believed the price for a yearly subscription to a TV, phone and broadband package cost them an average of £514, whereas the actual price was typically £1,100 per year.

Council tax is the biggest burden on households, which last year cost £1,121 on average, although households estimated it to be £367 cheaper at £754, according to a survey of 2,000 Britons carried out for Santander. Britons are also way off the mark when estimating their utility bills, believing their gas and electricity bills to be about £400 cheaper than what they really are, which was around £1,000 in 2015. Water bills cost on average £428 per household last year.

Keeping track of bills and price changes can be tough. During the winter bills are likely to increase, so it’s important to make sure you know what your spending. It is also worth considering paying your bills by direct debit, as it is often cheaper to do it that way.

The survey also established that a quarter of people in the last year have either borrowed money or took from savings to cover bills, while more than a third admitted they have struggled to get by.

One reason why the estimated and actual spend differs so much may be due to a lack of attention to bill statements being as almost a third of bill payers admitted they often don’t even read their statements thoroughly, while 5 per cent don’t even open their statements, according to the report.

Post courtesy of This is Money.