In a world where the price of energy and electricity is continuously increasing and causing worry to households across the globe, you need to make sure you have the right measures in place to combat this financial blow.
Many households will be using prepayment meters to carefully track the amount of energy they are using and paying for, but during the Cost of Living Crisis, this may not be the best option. So much so, that Citizens Advice estimated that 600,000 people were forced onto prepayment meters in 2022 because they could not afford their energy bills.
We have put together a number of essential things you need to know about prepayment meters, so read on to find out more.
What is a prepayment meter?
Prepayment meters (also known as pay-as-you-go meters) are a type of energy meter which requires users to pay for their energy before they use it. Payment for your meter can be done either through a key, token or smartcard which can be topped up by a local shop or even via a smartphone app.
Once this is done, energy is credited to your account and will be used to power your home. As you would expect, the more energy used, the quicker your credit will decrease and therefore time to top up comes around faster than you realise.
What are the benefits of a prepayment meter?
You may be wondering why people opt for a prepayment meter over other options such as a smart meter. There are a number of reasons why, including:
- Control over the amount of money you spend, and how often you spend it
- Helps you to prevent running up unexpected and hefty bills
- Helps to prevent coming into debt with your existing energy supplier
- No monthly bills
Personal control over the amount of money spent on energy means you have the choice to spend little and often, and that you will never overpay. Many lower-income households choose prepayment meters for this very reason.
What are the disadvantages of a prepayment meter?
While there are a few reasons why prepayment meters may be beneficial, there are also a number of reasons why they are not the ideal choice for everybody. According to Citizen’s Advice, prepayment meters should not be used if running out of credit could cause you serious issues. This includes those who have long-term health conditions, a disability, medical equipment which would not work without electricity and young children. Other disadvantages of prepayment meters include:
- Less tariff choice, standing daily charges and overall more expensive
- You can be left without electricity and energy when credit runs out
- Potential hassle to keep topping up credit
- You will need to pay for extra credit if you are leaving the house for an extended period
When it comes down to it, you need to be proactive when it comes to prepayment meters, as failure to do so could result in no power and a frantic scramble to top up.
Swapping from a prepayment meter to a standard meter
So, what are the options if you wanted to swap from a prepayment meter to a standard meter? Luckily, most energy suppliers will allow customers to move from the former to the latter free of charge. However, this is something you need to investigate if it is something you are considering, as some suppliers may charge for this transfer.
One thing to note is that moving away from pre-paid meters will usually require you to have settled any outstanding debt on your account, and your credit score will be checked.
Can I be forced to move onto a prepayment meter?
Struggling to pay your energy bill could potentially result in your supplier suggesting you move onto a prepayment meter instead. Unfortunately, suppliers do not need your permission to move you to a prepayment meter, but it is usually done as a last resort method and other necessary steps must be taken before this point is reached, as outlined by Ofgem the energy regulator. This includes options like repayment plans to help you get back on track with the money you owe to the supplier.
In recent months, more and more households have been forced onto prepayment tariffs on their smart meters as a result of Cost of Living financial difficulties. Multiple energy suppliers have chosen this route due to the increase in debt owed as energy prices rose significantly over recent years. However, in many cases, companies have come under fire for forcefully changing households onto this tariff or installing a prepayment meter, despite many of their customers being vulnerable and unable to keep on top of the credit.
Do you want to know more about how we can help?
As a debt solutions provider who cares about our customers, we are always on hand if you have fallen into debt as the result of a prepayment meter, or any other sort of meter. We understand that many households are struggling to make ends meet with the current Cost of Living Crisis, and we are here to help.