Prepayment meters – also known as pay-as-you-go meters – are a type of energy meter that require the user to pay for their energy before using it. As the name suggests, it’s like having a pay-as-you-go phone deal rather than a monthly contract. And, like with pay-as-you-go phone bills, there are situations where it will be the best option for you.
Payment￼ can be done via a key, token or smartcard that can be topped up at various places (you’ll often be able to sort it out at your local shop) or, more regularly these days, through a smartphone app.
Energy is then credited to your account and your meter will use up this credit until it runs out. Naturally, the more energy you use, the quicker the credit goes.
Prepayment meters have a reputation for literally leaving people ‘in the dark’ when they run out – causing a frantic dash to the nearest paypoint. But most modern versions allow you a set amount of credit to run over into, buying you time to top up and not giving you a nasty shock.
Your meter may also feature a ‘no disconnect’ mode to ensure you aren’t cut off at times when you simply cannot add more credit. Your￼ local PayPoint, Payzone and Post Office are probably shut in the middle of the night, for example, so it would be unfair to expect you to top up when that’s literally impossible.￼
Some suppliers now offer 24-hour top ups via text, app, phone or online, so thankfully the days of people running around in their pajamas trying to top up their energy meter should be behind us.
An estimated 16 per cent of all customers in the UK use a prepayment meter for their electricity, according to statistics from industry regulator ￼Ofgem. That’s around six million folk.
Working out ￼how to read your meter is fairly simple. To get a ￼meter reading from your prepayment meter you usually have to press a button on it (which tends to be blue).
This should change the display from showing the remaining credit on your meter to showing the actual reading – from here it’s just like taking a normal meter reading.
Prepayment meter advantages
Using a prepayment meter to pay for your gas and electricity in advance has a number of benefits:
- You control how much and how often you pay for your energy.
- Helps prevent running up large and unexpected bills.
- Helps you avoid running into debt with your energy supplier.
- If you’ve fallen into debt, it helps you pay back the outstanding balance in agreed amounts over a set period of time.
The major downside is the cost. You can still switch suppliers and tariffs, but prepayment meters are one of the most expensive ways to pay for energy. It’s not really advisable unless you have to.
Prepayment meter disadvantages
- More expensive than other types of meter.
- Topping up at your local shop or newsagent can be inconvenient.
- If you can’t get out to top up your meter, your energy may be switched off, leaving you without any power. And you may have to repay any outstanding credit before it comes back on. D’oh!
- If you forget to charge your meter before you leave the house for a few days or go on holiday, you may come back to a melting freezer because the power has been switched off.
Prepayment meter vs direct debit
So prepayment meters are pay-as-you-go and expensive, but how do they compare to those who pay by direct debit?
This allows the user to spread the cost of their energy evenly throughout the year. By paying a flat monthly rate, you won’t have to dip into your savings when your energy naturally increases in the winter.
Paying by direct debit means the bill comes straight out your account once a month on an agreed date. There’s no fuss and no need for you to change anything about your payments from month to month.
Prepayment meter vs smart meter
￼Smart meters are a great solution for people who want to see how much energy they’re using. They’re the new generation of gas and electricity meters ready to take over.
They show you exactly how much energy your home is using in pounds and pence, in almost real-time, through an in-home digital display. Proper 21st century stuff.
Smart meter￼s help you track what you use and understand where you can make reductions in your energy use to help save money.
All households in England, Scotland and Wales must be offered a smart meter by their energy supplier by 2020.
Any other meters?
￼Economy 7 meters and economy 10 meters are other types of meter, where you can get a cheaper rate for your usage for either seven or 10 hours of the day.
Economy 7 meters track your usage separately depending on if it’s daytime or night-time – the night rate is usually much cheaper.
Economy 10 meters are similar, but you get three of your cheaper hours in the afternoon in addition to the seven at night.
How do I switch from a prepayment meter to another type of meter?
We know prepayment tariffs aren’t as competitive as most standard meter energy plans, so if you have decided to switch that’s good news.
￼As of 2016, the ‘big six’ energy suppliers won’t charge to switch prepayment meters over to credit meters.
However, bear in mind not everyone is eligible to change their prepayment meter. You’ll need to ensure that your energy account is debt free, for starters, and suppliers will often run a credit check to make sure that they can trust you.
Some smaller suppliers will charge a small fee for the removal and installation of the new meter. But with you likely to save money on your energy plan in the long term, it’s probably worth it.
Can I change energy supplier if I have a prepayment meter?
We’ve got good news and bad news. The good first: yes, you can switch energy supplier if you have a prepayment meter in your home.
Now the bad: if you’d like to switch to the most competitive energy tariffs, you’ll also need your change your prepayment meter to a credit meter (see above).
Here at Look After My Bills we help you make the switch. We’ve saved customers up to £350 a year and will keep switching you whenever we see a suitable deal. If you’ve got three minutes spare, ￼what are you waiting for?