How do they work?
Prepayment meters require you to pay for your energy before you use it. You will be given a prepayment key, a token, or a smart card by your supplier.
You can top up at a shop or Post Office, and some smart cards let you top up online. You then put your key or card into the prepayment meter at your home to transfer the credit.
Pros and cons
Only pay for what you need
Easier to manage debt
No large surprise bills
Free to switch tariffs
Higher energy prices
Limited choice of tariff
You can only top up at a shop
Loss of service if credit runs out
Do they cost more?
Yes, prepayment meters are one of the most expensive ways to pay for your energy because gas and electricity prices are charged at a higher rate.
Standing charges also apply and could build up as additional debt if you do not regularly top up your meter, so check your meter display to find out how much your standing charges are.
Ofgem have proposed caps on the price of prepayment meter tariffs, which should come into effect by 2017. You can read more about the proposed changes here.
Why are they used?
Some suppliers install prepayment meters if you are in debt because they may make it easier to manage what you spend.
If you rent your home, your landlord may have installed a prepayment meter to prevent tenants from running up energy debts.
You may inherit a prepayment meter if you have moved into a new home that already has one installed, so ask your supplier about switching to a regular credit meter.
Can you change your meter?
Yes, you can ask your energy company to swap you to or from a credit meter, and they may even be able to do this free of charge.
A credit meter lets you pay for your gas and electricity after you have used it, and is usually the cheapest way to pay for your energy.
You could also ask your supplier about switching to a cheaper prepayment tariff, although you may still pay more for your energy bills long term.
If you are renting, you need your landlord's permission to switch to a credit meter.
You should contact your supplier as soon as possible, so that it can be fixed or replaced.
If your supplier does not fix or replace your meter within 3 hours on a working day, or 4 hours at weekends, you have the right to £30 compensation. Find out more on the Citizens Advice website.
Should you use one?
You should only use a prepayment meter if:
You are in debt to your supplier
You find it difficult to budget for monthly payments
You are renting and your landlord will not install a credit meter
If you can manage regular payments to your energy company, you will have access to much cheaper tariffs and receive a discount for paying monthly.
How do you top up?
To top up your prepayment meter, you will need to:
Take your prepayment key or card to a shop with a PayPoint sign, or to the Post Office
Pay for a minimum of £5 credit, and a maximum of £49 for gas and £50 for electricity
Take your key or card home and put it into your prepayment meter
Credit should appear automatically if you use a prepayment electricity meter
You may need to press and hold the A button on your meter for gas
Keep receipts for any gas or electricity credit you buy, in case the credit fails to appear in your account and you need to ask for a refund.
What if you lose your key?
You can get a replacement from your energy company, but they may charge you so you should try to keep your prepayment key or card safe.
You may have to collect your replacement key from your local PayPoint shop, or your supplier may post it so check this when you call.
What if you run out of credit?
If you have forgotten to top up your meter, you can activate your emergency credit so you can still use your gas or electricity.
You can do this by putting your key or card in the meter, and selecting the emergency credit option.
Emergency credit is usually limited to around £5, and you need to pay it back the next time you top up your meter. For example, if you top up by £20 after using your emergency credit, you will only have £15 available credit.
If you fail to pay back your emergency credit, you could lose service until it has been repaid.
What if you move home?
You will need to get a new prepayment key because it is linked to your energy account rather than your home.
You should throw away your prepayment key for your old home once you have moved, to prevent your credit being used by the new occupants.