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 are right for you.
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
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 set price caps on prepayment meter tariffs, which come into effect in April 2017. You can read more about the changes here.
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 with uSwitch, including deals without a prepayment meter
If you move to a deal without a prepayment meter, your energy company will need to install a credit meter instead. Some suppliers don't charge for this, but ask them before you switch.
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 can switch to or from a prepayment meter or a credit meter. But if you are renting, you need your landlord's permission.
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.
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.
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.
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.
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.
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.
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.