Decide if prepayment is right for you

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

There are good things about prepayment but it’s not right for everyone. It depends on your situation if it will be a good choice for you. 

Prepayment can be good because:

• it might help you budget how much you spend on energy

• you can top up the amount you want to spend, when you want to

• you can check how much credit you have left

• It might help you understand how much energy you use and how much it costs

Prepayment might not be the right choice because you have to top up before you use energy. 

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 moving to prepayment would cause you problems

You shouldn’t move to prepayment if it wouldn’t be safe or practical. For example, if running out of credit and having no gas or electricity would cause you a serious problem because you’re disabled or have a health condition.

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.

If you already have a smart meter, your supplier can remotely switch your meter from paying by credit to prepayment. 

If you don’t have a smart meter, you can ask your supplier to install one.

Check how to top up your credit

If you have a smart meter with a prepayment setting, you can top up:

• using your card or key at a top-up point - for example at a local shop or Post Office

• online - for example using an app on your mobile phone or on your in-home display (IHD)

You can check how much credit you have left on your IHD or on an app, if your supplier has one. 

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 don’t have a smart meter, you'll need to buy credit for your meter from a top-up point with your card or key.

If you run out of credit on your prepayment meter

You might be able to get temporary credit called ‘friendly hours credit’ or ‘friendly credit’ if you run out of credit during certain times. 

Friendly hours credit lets you keep using electricity at night, at weekends or on bank holidays. Check with your supplier if you’re not sure if you can get friendly hours credit.

If you use friendly hours credit, you’ll need to pay the money back the next time you top up.

If you have a smart meter, you’ll get friendly hours credit automatically. 

If you don’t have a smart meter, you might get friendly hours credit automatically. If you don’t, you’ll need to use your card or key at a top up point.

If you can’t top up at a top up point, or you keep running out of credit, you might be able to get temporary credit sometimes called ‘emergency credit’. Check how to get temporary credit for your prepayment meter.

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 need to have credit on your prepayment meter to pay the standing charge - 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 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 or paying when you get a bill.

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.

Check how you'll pay 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.