More than 4.5m homes in the UK have prepayment meters with the main benefit they bring being that it helps control and budget more effectively. This is particularly handy, as was the intention, for those on lower incomes, or who simply want, the flexibility and control over their outgoings.
However, this doesn't mean they are a good thing. They can often be inconvenient and expensive, but can also help to prevent you getting into debt with your energy supplier. Our guide to prepayment meters should help you to decide if they are right for you.
Prepayment meters work in the same way as a "Pay-As-You-Go" mobile phone bill - you need to put credit on to the meter before you can use the gas and electricity supplied to your home. Once the credit is used up, your energy supply will stop until it is topped up again. Obviously if you are not able to get out to top up your meter due to illness or bad weather, this can cause you issues but we advise you seek support from friends, family or your energy supplier themselves.
Most meters can be topped up using a card, key or token at a Post Office or PayPoint outlet (you will probably have a local corner shop that is a PayPoint or PayZone outlet). Your energy company will provide you with this device, but it is your responsibility to keep it safe. Once your device has been topped up, it needs to be inserted into your meter for the credit to register.
There are three main types of electricity prepayment meter, which are smartcard meters (where you top up a card online), key meters and token meters (both of which must be topped up in a store). Most gas meters are now Quantum meters, which use a card to register credit (the card must be topped up in a store).
Not all meters are supported by all suppliers (for example Scottish Power support key meters for electricity and British Gas support Smartcards), and it is difficult to find out definitively who supports what. One of the drawbacks to being a prepayment customer is the uncertainty that this causes.
Having a prepayment meter almost always means you will be paying more than you need to for your energy bills. Not only is the unit price for your energy more expensive with a prepayment meter, but the cheapest energy tariffs offered by suppliers are usually not made available to prepayment customers.
In addition to this, if you have an older style of meter then it may need to be updated with price changes manually. As energy suppliers will need to go round many different houses to do this, it could sometimes be months until your meter is updated- leaving you paying over the odds for your energy, or finding out that you actually owe money.
This basic principle of a prepayment meter goes against the very premise of their existence to help low-income households control their energy costs by then charging them some of the highest energy unit rates in the market. The reason for this cost, is that these meters (unless smart prepayments) require energy suppliers to manually recalibrate them when unit prices change. This therefore meaning they have to send people to update the meters. It is this increased maintenance cost that energy suppliers say is the reason for increased unit prices per kwh.
If you have decided that a prepayment meter is not right for you then you can switch to a credit meter. The best thing to do is to ask your current supplier to change this for you (although in some cases you may be charged for this). If you have had a prepayment meter installed due to falling behind on your bills then they may refuse to do this for you. Once you have had your meter changed then you can take advantage of the full range of tariffs in the market by using our energy price comparison calculator to look for the best energy deals on gas and electricity prices.
If you have decided to stick with your prepayment meter, then it is important that you compare energy prices for your home. You may be able to get the cost down by switching energy suppliers, or switching tariffs. Our price comparison tool can help.
There are a number of factors that you might want to take into consideration when choosing a new cheap gas and electricity supplier. Some of these are listed below.
TheEnergyShop.com pulls together all this energy switching information into a single, easy to use place to make it easier for you to make your choice. Start your energy comparison
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The Energy Shop is a free, independent and impartial energy price comparison service. We can help you compare and switch energy suppliers to help you save money. Our service is accredited by the Ofgem Confidence Code.
