Your Prepaid Energy Meter Explained in Full

12th March 2018

By James Story

Are you considering a prepayment meter for your gas and electricity? Has your energy supplier recommended getting one fitted for your home? Perhaps you’re interested in finding out what the pros and cons are of a pay-as-you-go system? There are advantages and disadvantages of a prepaid energy meter. Anyone looking to switch their meter should consider all the variables before having one installed.

Here, we explain the prepaid energy meter in full. Including how it works, how to get one, how to find the best deals, and what the benefits are to you as a customer.


How a Prepaid Energy Meter Works

A prepaid energy meter using a GSM circuit is designed to turn the energy supply to a residence on and off based on a credit top-up system, which is fully controlled by the user. These meters work on a pay-as-you-go basis and can be topped up (much like a pay-as-you-go mobile phone) at participating shops, post offices or via the internet.

Simply put, a prepayment meter allows customers to pay for their energy in advance so they don’t have arrears (such as monthly or quarterly bills). Allowing them to have more control over their monthly outgoings and also helping them to budget more effectively.

There are three main types of prepayment meter being used today, all of which work in the same way. You will be provided with a key, card or app download to top-up your energy with. Regardless of which system you use, it is important to keep them in credit so you don’t have your electricity cut off at an inconvenient time.

Key Meters

Key meters use a small electronic key device. The device holds all of your tariff information inside it and your meter will be updated once you insert the key.

Card Meters

Smart cards are used as a communications device to send data to your energy supplier once it has been topped up.

Smat Meters

Some of the newer meters now come with an easy phone app installation, so you can pay for credit even when you are on the go.


Is a Prepaid Meter Suitable for Me?

Over the past decade, the percentage of prepaid energy customers in the UK has grown from 7% to 16%. It is therefore common for households use prepaid meters over a standard meter with bills. Currently, around 5.9 million people in the country are using a prepaid meter for their gas and electricity, and making the switch is an easy process.  

But is a prepayment meter right for you? Because whilst it allows you to pay for your energy up front, it’s often not the most cost-effective solution. Not to mention, it’s not as convenient as having billed gas and electricity.

Some customers will have always had a prepaid meter and it’s what they’re used to. Others will move into a home with a meter already installed and they don’t bother to change it. And some will be using a prepayment meter for their energy after getting into debt. There are also other reasons for wanting a pay-as-you-go tariff, such as shared housing where there are several housemates living together, or landlords who want a convenient way to manage energy for tenants.

In many cases, though, a prepayment meter is best suited for customers who have accrued fuel debt, have a poor credit rating, or anyone who is struggling to keep up with their bills. If you fall into debt, your energy company may arrange for a prepayment meter to be installed on your property.


Advantages of Using a Meter

There are several advantages of using a prepaid meter over a standard meter. Here are some of the reasons why you may benefit from a pay-as-you-go system.

Manage your debt – a prepaid meter ensures that you don’t get further into arrears with your utility bills.

Reduce energy consumption – having a meter installed can encourage you and your family/household to watch your levels of gas and electricity consumption. This is a great way of lowering your outgoings and reducing your carbon footprint.

Prevent large bills – using a prepaid meter means that you know exactly what you are spending on your energy. Preventing the problem of large, unforeseen bills and statements.


Disadvantages of Using a Meter

Whilst a prepayment meter can be useful in helping you manage your debt or keep a tighter control over your finances, there a quite a few disadvantages to bear in mind. Often, these will outweigh the benefits. Here are some of the reasons why a prepaid meter may not be suitable for you.

Expensive tariffs – generally speaking, prepayment meters don’t offer the best energy tariffs around, so you could be paying more for your gas and electricity. The best deals on the market aren’t usually available to prepaid customers.

Not as convenient – many see credit meters as an inconvenient option as you have to go to a shop or post office in order to top up your key or card device.

Interruption to service – if you are unable to top up your credit, your energy supply will be cut off.

Some meters require manual updates – older meter versions need to be updated manually when there are changes to tariffs and pricing. In some instances, this might mean that you end up paying over the odds, or you could get landed with a lump sum of arrears.


How Do I Get a Prepayment Meter Installed?

If you believe that a prepayment meter is for you, the next step is very simple. The first thing you need to do is research different energy companies that offer a prepaid energy plan. By comparing energy prices online, you can find the cheapest deals on the market. Once you have found the right deal, call the energy company to arrange for an installation at your home.

Usually, prepaid meters do not cost you any extra for installation. Most energy companies can set one up at your property free of charge. However, there may be a small number of firms out there that still ask for a fee. The UK Citizens Advice Bureaux specifically states on its website that “you shouldn’t pay to have a prepayment meter installed”. They also advise that you should switch suppliers if they try to charge you. In some cases, if you tell your supplier that you are going to change companies, they will waive the fee altogether.


Can I Switch Suppliers with a Prepaid Meter?

If you have a prepaid meter, you can still switch suppliers whenever you like. This gives you the freedom to shop around for more affordable rates, just like everyone else who uses a standard meter with bills. However, there are a couple of things to bear in mind before you decide to switch energy companies.

Firstly, the number of prepaid meter deals are fewer than other deals out there, which means that you won’t have as much choice when it comes to cheap tariffs. It may be hard finding a good deal to suit your situation, but regularly keeping an eye on the energy market is the best way of finding out if you can save any money.

Secondly, switching suppliers sometimes comes at an added cost. This could be an engineer call-out fee or the cost of setting up a new meter for your house. But bigger companies, such as the ‘Big Six’ energy firms, can usually do this for free.


How Do You Change From a Prepaid Meter?

If you have moved into a property with a prepaid meter, or you no longer want to use the one you got installed, you always have the option of switching to a standard meter. The cheapest deals out there are normally fixed term tariffs, so it could be a smart move if you have the means to pay by direct debit each month.

It’s important to bear in mind that switching from prepaid to a credit account means that your energy company will have to run a credit check on you. If you have had trouble with debt or paying your bills in the past, it’s advised that you view your credit score using an online service before proceeding.


How to Find the Best Prepaid Energy Deals

Whilst pay-as-you-go meters don’t offer the best rates around, there are still ways to find an affordable tariff that works for you and your budget. The key is to shop around to seek out the best deals available. Use an online search tool and by filling in a few simple details, you can bring back a list of results to help you compare energy rates.

Be sure to check the fine print as there could be hidden costs involved with prepaid meter installations (or removal if you decide to switch back at a later date). Also be sure to talk to your existing energy supplier if you run into debt, as they can sometimes help with advice on the best way forward.

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