Prepayment meters
Prepayment meters are a way to pay for your gas and electricity before you use it. They can be topped up with credit, brought from a local pay-point, using a key or card and because you pay for your energy up front, you avoid any monthly/quarterly bills. Currently, 15% of all energy consumers pay their energy bills using prepayment meters - this is higher than at any other time. Before getting a prepayment meter, it is a good idea to go through the advantages and disadvantages of different payment methods to work out which payment method is best for you and your circumstances. For a prepayment meter, the advantages and disadvantages are:
Advantages
- Meters can be set to recover debt at an agreed rate
- Greater control of how much you spend on your energy bills
Disadvantages
- Big seasonal differences in top up payments, especially winter gas payments
- Credit can run out at inconvenient times such as in the middle of the night
- Cheaper tariff options are often not available to prepayment customers
- Can be left without gas and electricity if don't have the funds to top up
Repaying fuel debts
Your supplier may ask you to have a prepayment meter if you get into debt with your energy bills; around 60% of prepayment meters are installed for this reason. Before getting a prepayment meter it is worth exploring other repayment options with your supplier first as often these meters can be more expensive than other payment methods.
If you get into debt with your supplier, call them as soon as you are able to discuss your options. You may be able to set up a repayment plan without having to have a prepayment meter. If you do decide to have a prepayment meter fitted make sure to agree on a repayment amount that you are able to afford.
If you are paying back a debt through your meter, call your supplier to check if they will consider reducing your weekly repayment amount. This will mean more of the money you top up with will be credit. It will however take longer to pay off your debt.
Standing charges
The majority of energy tariffs, whether you have a credit meter or prepayment meter, have a standing charge. With a prepayment meter you will usually pay a standing charge whether you use your gas/electricity or not, and this can cause problems for some people. For example if you are away from your home for a holiday/ hospital stay, even though you may not be using any fuel, your meter will still deduct your standing charge. It is worth topping up your meter before you go away to ensure it doesn't go into debt as this money will have to be taken off your credit top ups when you return.
Currently using a prepayment meter?
Try to keep your meter topped up as regularly as possible to avoid relying on your emergency credit. Your emergency credit usually costs the same amount as your standard credit, however while you meter is using emergency credit, most suppliers will not deduct your standing charge or any debt repayments you have. Instead this will usually be taken off when you next top up and go back into your normal credit. This is often the reason why people think emergency credit costs more. Different suppliers may have different rates at which they take this outstanding balance back so contact your supplier if you are not sure.
It is also worth trying to top up some extra credit throughout the summer months when your energy costs are lower to help spread the cost of high winter top-ups.
If you move into a home with an existing prepayment meter make sure you take a meter reading and call the supplier to advise them you have moved in. This is important to make sure there is no debt on the meter from a previous resident and to make sure your key and account are registered to you.
By scrolling through your meter display screens you will be able to see how much credit you currently have, how much your standing charge is and the cost of the units you are using. You should also be able to see how much debt you are repaying (if any) and how much emergency credit you have. The different screens may be set out differently depending on your meter. If you are unsure about your meter readings call your supplier or visit their website for advice.
Switching with a prepayment meter
You can switch if you have a prepayment meter so long as you have a debt less than £500 on your gas account and £500 on your electricity account. Using an Ofgem Confidence Code impartial comparison site will help you to find out who would be the cheapest supplier for this kind of meter, but will also show you the savings you could make through switching to an alternative payment method. If you wish to switch to a different payment method you will need to call your supplier. Some suppliers will change your meter free of charge, others will require you to pay for the change. If you wish to change from a prepayment meter to a credit meter, it is likely that you will need to pass a credit check before a supplier will do this and you may be asked to pay a security deposit.
Smart meters are a new type of energy meter that will replace your existing gas and electricity meters whether they are credit or prepayment. They are being installed by the different energy suppliers. These meters have several benefits in that they take away the need to read and send meter readings to your supplier and therefore eliminate estimated bills. They provide you with real time readings so you can see how much energy you are using and the cost of that energy. Importantly, if you are considering switching payment methods, smart meters can be set to prepayment or credit meter mode remotely therefore removing the costs to install/remove meters. Further information can be found in the Government's Smart Meter guide.
