prepayment meters

Could Switching From Prepayment Meters Save You Money?

Prepayment meters are notorious for being more expensive for energy costs than a billed meter.

The Competition and Markets Authority (CMA) have already confirmed what most of us suspected all along, the cheapest tariffs on prepayment meters are, in most cases, still much higher than those for customers on a billed meter.

All prepayment customers should give serious consideration to moving over to paying a monthly Direct Debit on a billed meter, however it’s not always that easy.

What are prepayment meters?

In short, it’s a pay as you go meter that you need to top up with credit before using any gas or electricity – unlike a billed meter where you pay for energy only after you’ve used it.

You top them up, usually by key or card, at Post Offices, newsagents, shops and supermarkets.

Recently we seen the introduction of smart prepayment meters, with these you can top up online, by text or by smartphone app – depending on your supplier.

Why do I have a prepayment meter?


The main reason people find themselves on prepayment meters is they’ve got into arrears with their supplier.

Energy providers prefer to take this option if you owe them money, as any credit you top up onto your meter goes towards any arrears as well as paying for your current energy.

For instance, if you owe money on your electricity and you top up your meter with £20, your supplier may take £5 of that to go towards your outstanding debt, leaving you with £15 of electricity credit to use.

It gives them the assurance that paying this way you’ll eventually pay back all of the debt you owe.

Your landlord

If you’re renting, you may have found there was already a prepayment meter already installed in the premises when you moved in.

Some landlords prefer to have a prepayment meter installed instead of a billed meter to make sure their tenants do not leave the property before they have paid what they owe to the energy provider.

Unfortunately, this isn’t the cheapest option to you as a tenant.

What are my options?

According to Citizens Advice, customers on prepayment meters pay an average of £226 per year more than customers on Direct Debit tariffs.

So, why it may be easier to track how much you’re spending on your energy and it eliminates the risk of receiving large bills, paying on prepayment meters usually ends up with you paying much more.

There are some options available to you as a prepayment customer, even if you have poor credit or you’re a tenant.

Switch to a billed meter

To do this you’re going to have to meet certain requirement to appease your supplier.

All outstanding debt on the meter must be paid off in full and, depending on your supplier, you may have to pass a credit check.

If you’ve only recently been switched to a prepayment meter by your supplier, it’s unlikely they’ll let you witch back so soon.

You may be asked to pay a fee to have them switch your meters, however each supplier has their own polices concerning this so make sure you speak with yours about any potential costs you may incur.

Compare suppliers to see who is willing to switch your meters for you for free – you could save upwards of £60!

If your supplier does have a charge for switching meters from prepay to billed, work out the overall saving by switching to Direct Debit before you make the move to make sure it is financially worth it.

If you plan on staying in the property for a while, financially it will make more sense to move to Direct Debit in the long run.

If you’re renting your property, always check with your landlord first that you have their permission and get it in writing to avoid any issues further down the line.

Switch to a cheaper prepay tariff

If a poor credit history or landlord is preventing you from switching to a billed meter, there are still ways to save some money on your energy bills to maximise your money.

Shop around and compare energy prices and see if you are able to find a better deal elsewhere.

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