Decide if prepayment is right for you

Prepayment, sometimes called pay as you go, lets you pay for your energy in small amounts.

If you have a smart meter, your supplier can switch your meter from paying by credit to prepayment remotely. If you have an old-style credit meter, you can swap it for a smart meter in prepayment mode.

If you have a choice about moving to prepayment, think about how it'll affect you.

You could end up with no gas or electricity

You shouldn’t move to prepayment if running out of credit and having no gas or electricity would cause you a serious problem - for example, if you: 

• are aged 75 or older and live alone

• have children under 2 years old living in your home

• are disabled or have a health condition

• can't afford to top up and live with children aged between 2 and 5 years old

If you have impaired hearing or sight, you might find it hard to hear an alert or read the meter. 

If your supplier is trying to move you to prepayment, they have to follow rules from the energy regulator Ofgem. If you don’t think prepayment is right for you, check how to stop your supplier moving you to prepayment.

You’ll need to top up your credit

If you have a prepayment meter, you'll need to buy credit for your meter from a top-up point - often a local shop or Post Office. Your energy supplier will give you a top-up card or key. 

If you find it hard to get to a top-up point - for example, if you’d have to travel a long way - you could get a smart meter with a prepayment setting.

If you have a smart meter in prepayment setting, you can:

• top up using your top-up card or key

• top up online or through an app on your mobile phone

If you top up online, you should still keep your card or key in case you need to use it - for example, if the app isn't working.

If you have a health condition or disability which makes it difficult for you to reach, work or top up a prepayment meter, you shouldn’t move to prepayment.

If your supplier is trying to move you to prepayment you can check how to stop your supplier moving you to prepayment.

Check what you'll be charged on a prepayment meter

As well as paying for the gas and electricity you use, you pay a daily fee for being connected - known as a standing charge. You pay this with a normal meter too, but when you're on prepayment you need to have credit to pay it - even on days when you don’t use any gas or electricity.  

You still have to pay the daily standing charge even if you don't have any credit on your meter. When you next top up, you'll have to pay back all the standing charges that you owe.

The amount of the standing charge depends on where you live and what tariff and supplier you have. 

Example

Jacintha’s story

Jacintha has gas central heating, which she switched off last summer.

She didn’t top up her gas meter because she wasn’t using any gas.

The meter still took 28p a day for the standing charge, so she soon ran out of credit.

The standing charges built up until Jacintha decided to add some credit because she wanted to switch her heating back on.

By this time Jacintha owed £17.64 in standing charges. When she topped up by £20 the meter took what she owed and she only had £2.36 left. This meant she had to top up again the next day.

There are 2 main types of tariffs:

• standard variable tariff, sometimes called a ‘default tariff’ - your rate goes up and down with the price of energy

• fixed tariff - your rate stays the same for the length of your contract

If you’re not sure what gas or electricity tariff you’re on now, contact your supplier or log in to your online account to check.

Check if prepayment is cheaper than paying by direct debit

If you’re on a standard variable tariff (SVT), paying for your energy by prepayment is cheaper than paying by direct debit.

This is because you’ll pay a cheaper rate for each unit of energy you use. You’ll pay the same standing charge on an SVT as you would if you paid for your energy by direct debit.

You’re likely to pay more for your energy in winter

If you’re on prepayment, your supplier can’t spread the cost of energy over the year. You’ll probably pay a lot more in the winter when you need to use more energy to heat your home.

If you have a credit meter or a smart meter in credit mode you can choose a fixed or variable tariff that spreads your direct debit payments over the year. You’ll pay extra in the summer to build up a reserve of money. The reserve is used to lower the payments when you use more energy in winter. Your supplier will work this out so your payments will be the same every month.

Find out about the types of tariff you can choose.

Next steps

If you don't want to move to prepayment but your supplier wants you to, you might be able to keep paying for energy after you use it.