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Paying by Direct Debit could be pushing bills up new research has revealed, but in some cases by avoiding paying straight from the bank account, you could be paying extra.

Gone are the days when paying bills meant a trek down to the bank or shoving a cheque in an envelope. Nowadays 61 per cent of Britons no longer use cheques to pay monthly commitments and figures from BACS Payments Schemes, which runs the Direct Debit payment scheme, reveal cheque usage has declined across virtually all regular household and individual commitments.

However, those opting to pay by direct debit could be paying for the privilege.

New figures from MoneyExpert reveal that motorists paying for car insurance by direct debit could be charged an extra £182 for doing so. Only one in 12 motor insurance policies do not charge extra for paying by direct debit - with an average of 22.7 per cent tagged on for the right to pay by direct debit.

The figures reveal that an average annual policy costing £806 has £182 extra added for Direct Debit payment. On the face it drivers if they cannot find an insurer offering free direct debit could be better off getting a loan to buy insurance, as the equivalent interest rate would be lower, especially as the most expensive direct debit charge stands at 37.12 per cent. An even better option would be to take advantage of an interest free period offered by a credit card.

Sean Gardner, chief executive of MoneyExpert, explained: "Motor insurance premiums are at an all-time high and experts reckon they will continue to climb as both the number of claims and the value of claims continues to increase.

"Given that average comprehensive annual premiums are £806 it is no surprise that drivers opt to pay monthly to spread the costs over the year rather than paying in a lump sum. But that option comes at quite a substantial price."

He added that Direct Debit charges could wipe out any good insurance deals you discover.

"Motorists can still get good deals by shopping around and you should always review your insurance every year. But when you look around make sure that your savings are not going to be swallowed up by the extra cost of paying by direct debit," Mr Gardner said.

"It can make sense to pay upfront on a credit card as the APR charged will usually be cheaper than the average 22.7 per cent demanded by insurers. Look for zero per cent introductory rates on credit cards."

However, not all insurance companies charge for Direct Debit. Some insurers that do not charge for Direct Debit include Virgin Money, Heyday, Age Concern and Saga, along with some Norwich Union policies.

However, by not paying by Direct Debit consumers could be finding that they are paying more.

Research by uSwitch reveals from may BT customers will have to pay £4.50 a quarter for not paying by Direct Debit – along with late charges rising from £5 to £7.50.

In fact all the major phone companies charge for customers who cannot pay by Direct Debit. Virgin Media charges £5, Talk Talk £3.50 and Pipex Homecall 2.5 per cent of the bill. The best deal for those unable to pay via their bank account is from the Post Office, which only charges £1 extra as a processing fee.

The key to getting a good deal, be it on car insurance, telephone or other household bills is to shop around. But once you have nabbed that deal, make sure any savings are not lost by any charges for paying or not paying by direct debit.