Prepayment meters - all you need to know

Prepayment meters mean you can pay for gas and electricity on a pay-as-you-go basis, so you pay for energy in advance rather than monthly or quarterly in arrears. These meters can be topped-up at post offices and other shops, or online.

In other words, you pay for your energy up front instead of by quarterly bill or monthly direct debit. And if there is no credit in the meter, there is no energy supply to the home.

Customers in debt

If a customer is in debt with their energy supplier, prepayment meters could be installed to manage their arrears. If there is a switch to a prepayment meter, the person in arrears will pay off the money they owe in small amounts, as well as for the units of energy that they use.

A prepayment meter can help a customer budget their energy use but it can also be one of the most expensive ways to pay for gas a nd electricity. Running a quote on our energy channel will allow you to see which prepayment tariffs could best suit your usage, while also helping to bring down the amount you pay for your energy bills.

When you get to the question “How do you usually pay?” you should select 'Prepayment Meter' from the drop-down list. Doing so means your results will include prepayment tariffs alongside credit tariff alternatives.

How to top up your prepayment meter

Some smart cards allow you to top up with credit online, but you usually load your key or card with credit at the Post Office or a PayPoint or Payzone shop.

Your energy supplier should give you a list and it's a good idea to note down the nearest shops and their opening hours in case you need to charge your meter in a hurry.

How to replace your prepayment card

It's important to keep your key or smart card safe. If it is lost or damaged you should contact your supplier immediately. You might be able to pick up a temporary replacement at your local charge point while you wait for a new one to arrive, but the company will probably want paying for any replacements.

Is prepaid electricity more expensive?

Prepayment customers often pay more for each unit of energy than standard customers. Plus, they don't normally have access to the best deals.

However, different energy companies charge different rates to their prepayment customers, so you could save money by shopping around and switching to a cheaper tariff.

The Competitions and Markets Authority (CMA) recently called upon energy suppliers to provider better priced tariffs for prepayment customers. The CMA recommended a cap is placed on prepayment tariffs, meaning customers could be in line for a saving of around £300 million on their bills.

Read: How to switch to a prepayment meter

Pros and cons of prepayment meters

Here's a round-up of the advantages of prepayment meters along with what you should look out for:

Pros

• Prepayment meters allow you to carefully control the amount you spend on energy.
• Customers with prepayment meters are also spared any bill shocks.
• Competitive prepayment tariffs are becoming more widely available, with more providers entering the market for prepayment customers such as Utilita and E. Also being on a prepayment meter doesn't prevent you from switching, either to a different prepayment tariff or to a credit meter.

Cons

• The price of energy tends to be more expensive compared to credit meters.
• On a pay-as-you-go basis, you will certainly pay more over the winter months.
• You must keep an eye on your available credit, especially before going on holiday or if you're close to reaching your emergency reserve. If you top-up using a payment card at a local shop, ensure you're not left without electricity in the middle of the night if your closest payment outlet is closed.

Moving home with a prepayment meter

Some people inherit a prepayment meter when they move to a new home. If so, you should register with the supplier as the new owner or you could end up paying off someone else's debt.

You could also ask the company to remove the prepayment meter and put you on a standard deal, though again, there could be a charge. Watch the video below for more information on how to switch from a prepayment meter to a credit meter.