Deciding if a prepayment meter is right for you

Prepayment meters are pay-as-you-go gas and electricity meters, which can be topped up online or with a card at certain shops and post offices.

With prepayment meters, you pay for energy before you use it.

So they’re often an option for low-income households and people who are struggling financially who need help budgeting for gas and electricity.

But they aren’t right for everyone.

Helps you stay in control

With a prepayment meter, you’re in charge of how much energy you use and when you pay for it.

You decide how much credit to put on the meter and you can track your usage closely to avoid overspending.

This can make budgeting easier, especially if you’re on a tight income or want to avoid falling behind on bills.

No unexpected bills

Because you usually pay for your energy in advance, you won’t get surprise bills landing at the end of the month.

That can bring certainty, peace of mind and prevent debt from building up.

Easy to top up

If you have a smart prepayment meter, you don’t have to go out to top up.

Instead, you can simply top up online, through a mobile app, or by phone.

You can also check your credit balance in real time, so you can stay on top of what you’re using.

Useful if you’re paying off energy debt

If you owe money to your energy supplier, a prepayment meter can help you manage repayments.

A small amount can be automatically taken off your top-ups to go towards paying off your debt.

This can feel more manageable than larger repayment plans you might struggle to stick to.

But remember this isn’t the case for everyone as you won’t have much (or any) control over how much is taken.

So you might be better off speaking directly with your supplier to agree a more flexible repayment plan that better suits your situation.

Risk of having your supply stopped

If your meter runs out of credit, your gas or electricity can be cut off until you top up again. 

This can be a big problem if you’re especially vulnerable and you rely on energy to run medical equipment.

More expensive tariffs

Prepayment tariffs can be more expensive than those available to people who pay by direct debit.

You also won’t be able to access discounts for things like paperless billing.

So you could end up paying more for the same amount of energy compared to someone on a different payment method.

Higher costs in winter

Unlike direct debit customers, prepayment meter users can’t spread energy costs evenly across the year.

So your costs can jump during the colder months when you’re using more energy to heat your home.

That can, in turn, make it harder to budget and increase the risk of running out of credit when you need energy the most.

You might need to go out to pay your bills

If you have a traditional prepayment meter, rather than a smart meter, you’ll have to visit a shop, Post Office, or other top-up point in person.

This can often be inconvenient, especially if you don’t live close to a place where you can top up, you need to top up outside their opening hours or you have mobility issues.

You still pay daily standing charges

Even if you’re not using any energy, you’ll still be charged a daily standing fee to stay connected.

So if there’s not enough credit on your meter to cover this charge, the cost will build up and be deducted from your next top-up.

That means you could find yourself with less credit than you expected.

Anxiety and stress

If you’re struggling with energy debt, using a prepayment meter can take a psychological toll. 

Figures from Warm This Winter show that prepayment meter users with energy debt have higher levels of emotional distress (93%) than those paying by direct debit (58%). 

A smart prepayment meter works the same way as a traditional prepayment meter, but with a few key differences.

For example, the meter has a real-time digital display that shows your credit balance, energy use and alerts.

And although you can still top up in a shop, you can also top up online or through an app.

Also, if you find yourself in a better financial position, you can switch to direct debit or credit mode without having to replace the meter.

But you should be aware that each supplier will have their own emergency credit limit, and that suppliers can remotely change how your meter works.

Since 2023, energy suppliers haven’t been allowed to force customers over to prepayment without doing everything they can to help them with their money problems first.

So if you’re struggling with your energy bills:

Speak to your supplier

If you think your direct debit is too high, ask your supplier to tell you how they’ve calculated the amount they want you to pay.

And if trying to repay your energy bill arrears is making your financial situation worse, speak to them to see if you can agree a payment arrangement.

Make part payments

If you can’t afford to pay the amount you’re being asked for each month in full, you should still try to pay something if you can.

This shows your supplier that you’re trying your best, so they’d be less likely to try to move you on to prepayment.

Pay less towards your other debts

Energy bills are priority debts, so you should pay these ahead of non-priority debts such as unsecured loans and credit cards.

Know your rights

If an energy company is trying to move you onto a prepayment meter, you can refuse if you believe it could cause you harm or they haven’t offered you alternatives.

So make sure you understand your rights before you speak to your supplier.

And if they still want to move you to prepayment, you should complain.

If none of the exceptions or mitigating factors apply to you, your supplier can force you to move to prepayment.

If you can’t afford to top up your prepayment meter, you may be able to get help, such as:

• fuel vouchers
• energy grants
• grants from charitable trusts
• money from the household support fund

It might also be worth signing up to the Priority Services Register for free, as this entitles you to extra help from your energy supplier.

Find out more about what support is available here.