What are prepayment meters?

Prepayment meters, also known as pay-as-you-go meters are an alternative to the standard, credit gas and electricity meters. They allow households to pre-pay for energy before using it, which means that accounts never fall into arrears. This makes them a great solution for people wanting an easier way to manage budgets or stay debt free.

In 2019 over 4 million households were using prepayment meters which shows that they have a strong appeal. They have also come a long way since the early days of prepayment, with a number of payment options now available. Many UK energy suppliers now offer an App to make managing a prepayment account even easier.

What are the benefits?

As mentioned above, using a prepayment meter can help keep households out of debt. Other than a small buffer amount, you will not be able to use any more credit than you have added to the account.

Prepayment accounts can be much easier to manage. With a standard credit account, knowing exactly how much your bill is going to be is difficult to know. That is until the bill drops onto your doorstep or into your e-mail inbox. Paying for your energy in advance can remove any anxiety surrounding gas and electricity bills.

The way you pay will depend on your energy provider and the type of meter you have. Most accounts will offer online payment options through a website or App. Others use a key or card to top up credit at a PayPoint store or Post Office.

Are there any disadvantages?

Yes. There are a number of good reasons why the majority of energy customers choose credit accounts over prepayment.

Prepayment tariffs are usually more expensive. The rate paid per KWh for both gas and electricity is usually more expensive on a prepayment tariff. When comparing gas and electricity deals, you will find that the best on the market do not apply to pay-as-you-go.

If the credit runs out, there is a real risk that you will be cut off. This can be more than just inconvenient. Food in the freezer could defrost, fish tank pumps and exotic pet heat lamps could all lose power. These could all be costly and upsetting drawbacks of using a prepayment meter.

You must inform your energy supplier if you are using a prepayment meter and rely heavily on an uninterrupted supply. If health and safety issues could arise from power being cut, your supplier must make sure that procedures are in place to stop this from happening. This applies when occupants rely on equipment such as stairlifts or any other medical devices that need to be plugged in.

What types of prepayment meters are available?

As well as the more traditional gas and electric ‘key’ meters, smartcard and prepayment smart meters are now available. Although they all function in much the same way, how they are topped up differs slightly. With the older style ‘key’ meters, you will take your key or token down to your PayPoint or local Post Office. They will top-up your key with the amount of credit you have paid for. Once back home, insert the key into the meter and your new balance should be displayed. The smartcard operates in much the same way with a few added ‘bells and whistles’. The smart meters will all offer online access or an App to make managing your account more convenient.

Can an energy supplier insist I use a prepayment meter?

In short, yes.

If your energy supplier has reason to believe that you will struggle to keep up with your bills, they can insist that you switch to a prepayment meter. This is also true if you have fallen into arrears and are struggling to catch back up.

If you are struggling with energy account arrears, help is available. Have a look at the Fuel Direct Scheme, Affordable Warmth Obligation, cold weather payments and Winter Fuel Allowance for more details.

If you move into a home that already has an existing prepayment meter, you should contact the energy company immediately. If the previous occupier had a high level of debt, the energy costs associated with that meter may be higher than they should be for you. Then you can look at the market to see if you would be better off keeping the prepayment meter, or switching to a credit meter.

Should I get a prepayment meter?

This depends entirely on your personal circumstances.

If you are struggling with energy debt or with the management of your finances, a prepayment meter can simplify the way you heat your home and keep the lights on.

You will be better off with a credit meter if you can manage your finances and stay out of debt. The best deals on the market are only available for credit meters, with savings potentially in the hundreds of pounds per year.

Rob
Rob

Hi, I'm Rob and I run Energy-Review.co.uk. I initially started this project 5 years ago when I was looking to switch energy suppliers and found there wasn't a website that provided simple, data backed reviews on all the suppliers available. Since then, I spent have a lot of time (too much some may say!) looking at all publicly available data about each supplier and writing reviews using this information. These reviews are updated as regularly as possible and any data is backed up by a source where necessary. I have also started writing guides on various energy related topics which hopefully you will find useful. If you find any issues, please use our contact form to let us know.

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