The spin put on BT’s cash penalty

The news that BT is introducing a “penalty” for people who pay by cash rather than direct debit almost passed me by last week. Apparently, evil BT are going to punish pensioners and the needy, are pushing up charges by £4.50 with a new surcharge, or hiking charges by £4.50 per quarter for customers who pay by cash or cheque in a move that amounts to introducing stealth charges.

At present, BT gives customers who pay by direct debit a £1 discount per month. From May, they are reducing the cost of line rental for everyone by £1 per month, scrapping the direct debit discount and introducing a surcharge of £1.50 for people who do not pay by direct debit. The net increase for those who prefer to pay by cash is therefore 50 pence. The idea of having a different price for paying by cash is nothing new.

This just goes to show how the spin the media puts on an story can change people’s perception and make the matter seem much worse than it is. “BT increase prices by 50p” doesn’t have quite the impact as, “BT punish pensioners with £4.50 penalty.” The media’s reporting of the increase has no doubt done more to worry pensioners than the small print in BT’s pricing leaflet would have done.

As I understand it, people on BT’s Light User Scheme won’t have to pay the new charges for cash payment anyway. Anyone who spends enough on calls each month not to qualify as a light user clearly isn’t the sort of vulnerable person who is going to worry about a 50p per month increase.

While I do think the media is to blame for the way they have reported this story, it does have to be said that it’s a spectacular public relations blunder on the part of BT. Moving from a reward for paying by direct debit to a penalty for paying by cash is bound to result in negative press coverage. It makes me wonder if they have been warned about their current practice of advertising headline prices that already include a “discount” for paying by direct debit…

21 responses to “The spin put on BT’s cash penalty”

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  1. Addressing the Canny Investor Pingback

    […] The spin put on BT’s cash penaltyThe news that BT is introducing a “penalty” for people who pay by cash rather than direct debit almost passed me by last week. Apparently, evil BT are going to punish pensioners and the needy, are pushing up charges by £4.50 with a new … […]

  2. clear_zero

    not a good news

  3. Tony Harvey

    Many of us refuse to use direct debits because it puts someone else in some control over our bank accounts. Moreover, direct debits on utilities etc force us to leave an amount of money (at least several hundred) in our bank accounts permanently for fear that we will miss seeing a bill and a variable direct debit will make us go overdrawn and subsequently be bank charged for this. Whereas if we are sent a bill to pay by cheque or cash, we can select from which account we wish to pay the bill from, having made sure FIRST it will not make us go into overdraft and be charged.

    I strongly believe the REAL reasons Banks encourage people to use direct debits are a) because with them there is a greater probability people will go overdrawn by carelessness/oversight and consequently be charged (as already explained) and b) the extra margin of cash left in current accounts by millions of careful people to ensure direct debits don’t make them go overdrawn the bank can use a proportion of which to gamble on the currency markets and thereby make more “money for nothing” then they would otherwise have done if people had left less in their current accounts. I understand (from James Robertson- famous monetary reform expert) that Banks don’t as many people believe, keep their own and their customers money separate, so because of this they can gamble some of their customers’ money on the money markets.

    Incidentally, if you are interested in learning more about the unbelievable injustice where a small elite of private banks create the electronic money for mortgages and loans OUT OF THIN AIR- how the money lent is not depositors money at all; how they are charging a tribute- interest- for money which did not exist before the loan was made, so getting money back in the form of interest for virtually nothing; as I say if you are interested in learning more about this then please have a look at the extremely concise and easy to understand article at (If the link doesn’t automatically route you (often occurs) cut & paste it straight into your browser and hit “Go”).

    BT says their charge is a legitimate one for administration but I simply don’t believe that it costs them anything like £4.50 for EACH customer to process a cheque with the enormous economies of scale for millions of people who still pay by cheque. And what about people who would make an electronic payment (eg telephone banking) in response to a bill? BT still has to send out a paper warning bill even for people who pay by direct debit. And even if BT said the charge was because their bank charges THEM for cheque processing, BT like all big institutions TENDERS out its banking contract (currently with Barclays)- it could simply say if you are going to charge our customers eg £4.50 per quarter through us, we will simply place our huge revenue stream with another bank who doesn’t. I wonder if in the above ways BT is colluding with the banks so they can both find massive new revenue streams out of us?

    BT has got a monopoly on home phone LANDlines as follows: I have found you can only get one from a cable TV provider if you take broadband &/or cable TV as well- relatively highly expensive. And if you get a landline from another provider such as the postoffice (PO) home phone scheme its still via the BT landline and even though your contract is with the PO, they have to pay BT much of your line rental charge. You see BT have realised that they have a monopoly on people who want landline only so are cynically imposing new charges. But its still worth switching to PO (see below) because your contract once being with them will not force you to pay by Direct Debit and ALSO Post office will pay BT quite a bit LESS as a wholesale charge for the multiple landlines than lots of people paying BT as direct customers. So we’ll still be punishing BT for their outrageous and cynical soul-less corporation new charges.

    Do you realise that if BT get away with this it could well be the tip of the iceberg? Other mainstream utility companies will follow suit also forcing us to use direct debits. So we’ll end up having to leave about a thousand permanently in our Bank/Bsoc current accounts to cater for the regular automatic and variable withdrawals from a host of companies, for fear of missing one or more, going overdrawn and being bank charged. How would a poor person afford to keep £1000 permanently in their current account? And because we therefore will have to keep these accounts permanently topped up the banks will have a wonderful revenue stream available for interest and financial markets gambling, (if James Robertson is right- see the book ‘Monetary Reform- Making It Happen’). Do you want to be unwittingly forced to support the banks in this financial markets unproductive and parasitic massive money making?

    In summary I believe the £18 annual surcharge for paying by cheque to be outrageous and must be fought by customers, pressure groups and OFCOM at all costs.

    Finally & MOST IMPORTANTLY may I suggest that people leave BT immediately- before MAY 2007 when BT will also start charging an exit fee it seems- IN DROVES- for the Post Office’s Telephone account the terms of which I have just checked are not levying charges on people for paying by cheque or cash. Its charging is fairly similar to BTs (cheaper for certain calling patterns). Pick up a leaflet from the post office. I promise you I do not work for them I just want to hit BT for these OUTRAGES and Banks in the pocket where it hurts and so force a re-think.

    UPDATE: There is now a UK House of Commons motion originated by David Hamilton MP and signed so far by 35 MPs to urge BT to withdraw this levy. Encourage your own MP to sign. Further details:…557_110256.jsp

  4. Jonathan

    I think £1000 is rather an excessive figure for monthly utility bills. People have to pay their bills regardless of the payment method. The “poor” people need to find money to cover their bills anyway, so I don’t see that it makes any difference if it comes out of their account automatically after their salary is paid in. I guess self-discipline is part of the issue here: just because the money is in your bank account doesn’t mean you have to spend it. If the money isn’t in your bank account, where is it? In a savings account where banks are using it on the markets just the same? And are you really telling me most people move their money to a high interest account the same day it’s paid into their bank account? Most utilities let you choose your DD payment date, so why not set it the day after pay day?

    You can get cable phone from Virgin Media for £11 per month, although you do have to pay by direct debit! You even get a free basic TV package if you take their phone service! Admittedly, their calls are a bit more expensive than BT, but you also have to watch services such as the Post Office, TalkTalk, etc. whose call rates vary, and who can also prevent their customers using prefixes and discount calling services (BT aren’t allowed to prevent their customers using such services).

    Thanks for pointing out the £5 cancellation charge. I haven’t managed to find a reference for this yet, but I’m looking into it.

  5. Peter

    I pay online direct from my account. Where are the overheads for BT from that? I should be charging them for my time and the electricity I use! It’s not about the cost… it’s about making everything administratively easy for them. Why on earth in any case should the cost of everything automatically go back to the consumer? Where did this idea come from?

  6. peter shaw

    BT say that they will not penalise people who pay by bills by DD, not true I have just received my quarterly bill for rental, and the amount of £4.46 PAYMENT CHARGES is clearly marked.

    The amount will be debited from my bank on the 2nd of may 2007


  7. Jonathan

    After discussing this with you, it seems this is a charge for Caller Display. You pay for calls through Tiscali, and BT charge £1.75 inc VAT for this service if you don’t make any calls via them. Why they should call this a “payment charge” is a mystery to me – it looks as if they are trying to hide it.

  8. E.Powell

    On MY bill it clearly says “£4.50” payment charge – I *don’t* have caller display. How can you then say it’s merely a 50p increase? And that the £4.50 charge is not true, and it’s just the media getting it wrong?

    Fact – BT are charging me £4.50 because they don’t like my chosen method of payment. Even if you count the £1 discount for everyone, that’s still £3.50! Not 50p.



  9. Jonathan

    The discount is £1 per month, not per quarter. So the net increase is £1.50 per quarter, or 50p per month.

  10. trev

    I pay my bills on time by cheque.
    I keep an eye on my account, and take responsibility for my money have never had debt. I do not want my bank removing my money for me. I wish to do it myself.
    I should have the choice of paying as I wish,
    I use BT service, so am helping creating wealth for their shareholders etc.
    I object to paying another £4.50 extra for the privilige of paying by cheque.

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