The ultimate prepayment meter guide

Last updated: 10 September 2020

What do you need to know about prepayment meters?

If you’re wondering what a prepayment meter is, the answer’s straightforward. They simply require you to pay in advance for your energy, whether it’s by smartcard, key or text. Here’s a closer look at all the ins and outs of this common type of energy meter. 

What is a prepayment meter?

With a standard meter, you pay electricity bills on a monthly or quarterly basis. A prepayment meter requires you to pay for your energy ahead of time. This type of energy plan is comparable to a pay-as-you-go mobile phone, as you top up your account with credit for gas and electricity before you use it. 

In some cases, prepayment meters are installed because the household has fallen into debt with the energy supplier. Any outstanding debts are then paid off in small instalments along with the current gas and electricity use, and once the debt has been fully paid off, you may be able to remove the prepayment meter. Paying in advance lets you stay on top of your energy use and manage your budget. 

How do gas and electric prepayment meters work? 

There are plenty of ways to top up your meter, depending on the plan and type you have installed. Some take a token or key fob that you top up in person at a shop, while others use smartcards. Payzone, PayPoint and Post Office shops are all recognised locations where you can pay in advance for your energy. There are some suppliers who let you top up your meter online or by app, text or phone call. 

When it’s time to take a meter reading, look for a button on the display panel. This changes the display from showing your remaining credit to the reading. Although it’s best to keep your meter key or smartcard safe, there’s no need to panic if you lose them. The good news is that no matter which type of prepayment meter you have, you can get in touch with your supplier for a new one. The supplier might also authorise a temporary card to tide you over in the meantime. When in doubt, ask about these key replacement policies before signing any contracts. 

There’s nothing worse than running out of power just when you need it most. In many cases, you’ll have an emergency reserve of credit you can use to keep the energy flowing if you’re unable to top up your meter for any reason. Bear in mind, though, that this is limited and works like an overdraft. You’ll need to pay the money back straight away, so it’s best to keep this reserve just for emergencies.

The cost of a prepayment meter

So, what does all this cost? That depends – your prepayment energy plan will be based on your location and supplier of choice. Just like with standard meters, you can often find a better deal if you shop around between suppliers to find the best price. 

The downside is that having a prepayment meter often costs more than a standard meter. Unit prices for energy are higher to begin with, and the more competitive energy plans aren’t available to prepayment customers. 

Another factor that impacts cost is the style of meter you have installed. If you have an older model, a representative will need to come around every so often to your house to update the periodic price changes. There’s often a significant delay between the change in price and the representative’s visit, which can put you on the hook for more money than you bargained for. 

Moving into a new house with a prepayment meter

An essential part of moving house is sorting out the utilities. If you’ve just moved into a new home and you spy a prepayment meter, get in touch with the energy supplier straight away. They’ll need to know there’s a new account holder registered at the address, or you could end up paying incorrect rates that apply to the previous resident. 

This is important whether you’re a homeowner or renter – landlords often install this type of meter in rental properties to manage their tenants’ energy use. 

Paying off debt with a prepayment meter

If you’ve fallen behind on payments to your energy supplier, installing a prepayment meter is a common way to sort out the resulting debt. Under this type of repayment plan, you can manage the debt in small instalments rather than a lump sum. It’s a way for energy companies and consumers to work together and avoid defaulting. While you’re paying in advance for your future energy use, you’ll also have a small charge tacked on that goes towards your debt repayment. 

The different types of prepayment meters

Not all prepayment meters are equal. There are two main types you might come across depending on the supplier and plan you choose. You can top these up in slightly different ways, whether it’s in person or online. 

  • Key or token prepayment meter

Key meters work with a special key fob or token that holds your tariff information. You’ll manually top your device up at the closest participating shop or Post Office, before inserting it into your meter to register the credit. If you go for this option, it’s a good idea to write down the opening hours of your local shops. 

  • Smart prepayment meter

A smart prepayment or smart pay-as-you-go meter uses a smartcard that automatically sends your information to the energy supplier each time it’s topped up. Smart meters are also easier to manage than the older models. You’ll be able to control your account online or by text. Many suppliers offer an accompanying smartphone app that lets you check your balance, top up funds, or transfer credit between your gas and electricity meters. 

The pros and cons of electricity prepayment

Gas and electric prepayment meters aren’t for everybody, but they do hold advantages for some. Here are some of the benefits of electricity prepayment:

  • We all use more energy in some months than others. When you pay in advance, you won’t get hit with any unexpectedly large bills after a sudden cold snap. 

  • Budgeting for your energy use allows you to manage your debt more effectively. 

  • Rates for prepayment meters are becoming more competitive, with more ways to pay than ever. 

And here are some of the disadvantages of prepayment meters:

  • With some types of prepayment meters, you can only pay with key fobs and smartcards. Your energy could be switched off if you’re unable to get out of the house or the shops are closed.  

  • The overall costs for gas and electricity meters are usually higher. You won’t have access to the best energy deals, with fewer choices available to prepayment meter customers.

  • Some older models must be updated manually when energy prices rise or fall, which can leave you paying out-of-date rates for months. 

How to switch from a prepayment meter to a standard meter

Although you may be able to save money by switching suppliers, overall, prepayment energy plans are less competitive than standard credit meters. You’ll often save money on your energy bills by switching to a standard meter. As long as your credit score is in good standing and you’re up to date with payments, your supplier will most likely do this for free. If it tries to charge a fee for changing from the prepayment to credit meter, try shopping around for a new supplier that doesn’t.

If your prepayment meter was installed due to an outstanding debt, you’ll be eligible to switch it for a standard meter after that debt’s paid off in full. You might be required to pay a deposit ranging from £150 to £300 as insurance, but you’ll get this money back after a history of on-time payments to your supplier. 

There are a few things to consider before making the switch. Renters will need to obtain the landlord’s permission first. Be sure to check your tenancy agreement for details before you get in touch with your supplier and be prepared to foot the bill for reinstalling a prepayment meter when you move out. 

Making the most of your prepayment meter

If you’re not eligible for a standard meter, you’ve still got options – compare prepayment plans from different suppliers to find the best rates. Don’t forget about other benefits apart from the cost, like the convenience of being able to top up your meter by app or text. 

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Published on Wed 23 Oct 2019 03.30 GMT