What is a prepayment meter?
A prepayment meter is a type of domestic energy meter that requires people to pay for their energy on a ‘pay-as-you-go’ basis. It works like any ‘pay-as-you-go’ contract you might have had, or have for your phone.
In order for you to use any electricity and gas, you will need to pay for the energy as you use it, and then top up when your current payment runs out. You can top up your prepayment meter by putting money onto a smart card or ‘key’ that is then inserted into the meter. Your smart card or ‘key’ can be topped up at your local newsagents, PayZone or PayPoint.
Historically, prepayment meters have been known to leave people ‘in the dark’ due to their energy being cut off when the payment runs out. However, modern prepayment meters will often have an ‘Emergency credit’ setting which will mean that people can use a set amount of energy before the usage cuts out entirely.
Also, to stop people fumbling about in the middle of the night when the lights suddenly go out, modern meters could be fitted with a ‘No disconnect’ mode, which allows people to use their energy even when places to top up are closed.
Will a prepayment meter help me save money?
Typically, prepayment meters are more expensive than standard direct debit tariffs and credit meters. The Competition and Markets Authority (CMA) found that the cheapest prepayment deal on the market in 2016 was as much as £320 more than most direct debit tariffs on offer.1
What are the benefits of a prepayment meter?
Despite the aggravation of topping up your energy, there are some handy benefits of a prepayment meter,
- Because you can only use what you put in, prepayment meters are an excellent way of keeping control of your energy usage and spend. So if you have struggled with energy bills in the past, a prepayment meter will give you more control over your energy spend.
- Prepayment meters are also popular amongst landlords, as they don’t need to worry about tenants disappearing without paying off their energy bills.
- The biggest way that a prepayment meter will help you save money, however, is by stopping you from spending what you cannot pay for.
Why switch from a prepayment meter?
Despite the control that a prepayment meter can give you, often better tariffs can be found on a credit meter. This is because on this type of meter you pay by direct debit for the energy that you have used on a monthly or quarterly basis. Energy companies prefer people to pay via direct debit and therefore will offer more competitive deals if you switch to a credit meter.
How do I switch to a credit meter?
If you wish to opt out of a prepayment meter and switch to a credit meter you will first need to contact your energy supplier to find out if you’re eligible to make this switch. Sometimes your supplier may run a credit check to make sure you will be able to afford the repayments.
Once you have been accepted, the supplier will send out an engineer who will replace your prepayment meter with your new credit meter. If you’re with one of the big six suppliers then they will have their own rules and regulations surrounding this process.
If you’re with a smaller supplier then they may charge you a fee to switch from your prepayment meter to a credit meter. However, as you can save more money through a credit meter, the price of the installation is often negated by how much extra you save.
What happens if I have a prepayment meter in a rented property?
As mentioned above, if you’re renting, then it is likely that your landlord has had a prepayment meter installed so they can keep better control of the energy payments. However, if you have moved into a new property with a prepayment meter installed you first need to discuss with your landlord if you can be made the new account holder for your prepayment meter.
In order to make yourself the new account holder, you will need to get in touch with the energy supplier and ask them to name you as the account holder.
Once you are the account holder make sure to compare prices for different prepayment and credit meters, so you can be sure you’re getting the best deal. If you wish to be put onto a normal direct debit plan then this will require the current prepayment meter to be removed, and the new meter for your new plan to be installed.
Can I automatically switch supplier with a prepayment meter?
Currently, we’re unable to switch you automatically if you have a prepayment meter. In order to auto switch, you would need to change onto credit meter plan. Once this has been done you can sign up to Migrate with ease. We will then find you the best credit meter plans on the market every year for free. All you need to do is sign up.References
1. Competition and Markets Authority, ‘CMA puts £300m saving in place for prepayment energy customers’ available at https://www.gov.uk/government/news/cma-puts-300m-saving-in-place-for-prepayment-energy-customers