Is a prepayment meter right for you?

Pay as you go gas and electricity lets you top up credit when you need to but could cost you more. Here is what you need to know about prepayment meters and if they’re right for you.

Attractive hand pointing at energy meter

In this guide you'll find information including:

  • What are the pros and cons of a prepayment meter?

  • Do prepayment meters cost more?

  • How can I save money on my prepaid energy bills?

  • How do prepaid meters work?

  • Should I use a prepayment meter?

  • How do I top up?

  • What happens if I run out of credit?

  • What if I move home?

What are the pros and cons of a prepayment meter?

The basic advantages and disadvantages can be summed up as follows:

ProsCons
Only pay for what you need Higher energy prices
Easier to manage debt Loss of supply if credit runs out
No unpleasant large surprise bills In many cases you can only top up at a shop or post office
Free to switch tariffs without any exit fees Limited choice of tariff

Do prepaid tariffs cost more?

Yes, prepayment meters are one of the most expensive ways to pay for your energy because gas and electricity are both 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.

Like standard variable tariffs, Ofgem sets price caps that limit the maximum amount energy companies can charge for prepaid tariffs. From April 2021 to October 2021, Ofgem’s price cap on prepaid meters is £1,156 per year (based on average household consumption – your actual costs will vary depending on your personal energy usage).

How can I save money on my prepaid energy bills?

Switching to the right energy tariff can save you hundreds of pounds a year. You could:

  • Ask your supplier if they have a cheaper tariff you can switch to

  • Move to a cheaper prepayment deal with a new energy supplier

  • Compare energy tariffs, including deals without a prepayment meter

If you move to a deal without a prepayment meter, your energy company will need to install a standard meter instead. The big six suppliers should offer to do this for free, but there will likely be conditions attached – you’ll need to ensure you’re not in debt to your supplier, and you may need to offer a deposit as a guarantee if you have a poor credit history.

Switching to a standard ‘credit’ meter lets you pay for your gas and electricity after you’ve used it and is usually the cheapest way to pay for your energy, opening you up to a wider range of both variable- and fixed-range tariffs.

You can switch to or from a prepayment meter or a credit meter. But if you are renting, you’ll need your landlord's permission to do so, and may have to pay to switch back to a prepayment meter after you leave the property.

How do prepaid meters work?

Prepayment meters require you to pay for your energy before you use it. You’ll 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.

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.

Should I use a prepayment meter?

In most cases, a standard meter is the best option for most people – if you can manage regular payments to your energy company, you’ll gain access to much cheaper tariffs and receive a discount for paying monthly. However, there are some circumstances in which a prepaid meter may be suitable for you:

  • 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.

How do I 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 gas meter.

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.

Find your nearest shop with PayPoint.

Find your nearest Post Office.

What if I lose my key?

You can get a replacement key or card 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 to you, so check when you call.

What happens if I run out of credit?

If you’ve 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’ll 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 I move home?

You will need to get a new prepayment key because your current key is linked to your energy account rather than your home.

You should securely dispose of your prepayment key for your old home once you have moved, to prevent your credit being used by the new occupants.

Last updated: 1 April 2021