1. Energy
2. Prepayment Meters

More than four million UK homes have a prepayment energy meter. If your home is one of them, you may be wondering what your options are, if you can reduce the amount you're spending on gas and electricity or whether you can switch to a more common credit meter.

In this guide we’ll explain everything you need to know about prepayment meters – how to use them, what your switching options are and how you can save money if you have no choice but to have one.

What is a prepayment meter?

A prepayment meter is a type of gas or electricity meter that requires you to pay for your energy before you use it. Usually you top up using a key, token or smartcard at a shop or via an app.

Some prepayment meters are known as gas key meters or electricity key meters. This is because there’ll be a key (as we’ve said, this could also be a smartcard or token) that you use to ‘top up’ your credit in much the same way as you top up credit on a pay-as-you-go phone plan. You can top up at Payzone or PayPoint shops and at the Post Office.

Smart prepayment meters allow you to top up your credit using an app, by text or over the phone. This is far more convenient as topping up doesn’t require a trip to the shops. There are still some old prepayment meters that require you to drop coins directly into the meter, although these are few and far between now.

The idea behind prepayment meters is that they help people to manage their bills more easily. By paying for your gas and/or electricity before you use it, you’re not going to get yourself into debt. There is always the risk that you will forget or be unable to top up, in which case your power may be temporarily switched off, although some meters have an emergency credit budget for times such as these.

If you are in debt to your energy provider, an instalment plan may be added to your prepayment tariff. This means that every time you top up, a little bit of your credit goes towards paying off your debt.

Why does my home have a prepayment meter?

Prepayment meters are usually installed because someone has fallen into debt with their energy supplier. Paying for your gas or electricity in advance means you’re not going to run up a huge bill that you can’t afford to pay. The downside of this is that, if you don’t have credit on your account, then your power may be switched off until you top up again.

If you move into rented accommodation then you may find a prepayment meter. That’s because some landlords choose to fit prepayment meters in their properties to help tenants manage their finances and ensure they don’t get behind on their energy bills. You can talk to your landlord if you’d prefer a credit meter, but the final decision lies with them.

If you’ve bought a home and it has a prepayment meter, it’s vital that you get in touch with the energy supplier straight away or you may end up paying the wrong rate, especially if the previous occupant had been in debt to the supplier. Get yourself registered as the account holder, then start comparing prices from other suppliers to ensure you’re on the best possible deal.

Can I switch suppliers if I’m on a prepayment meter?

Having a prepayment meter doesn’t stop you from switching suppliers but it does limit your choices somewhat. Most energy providers have at least one prepayment tariff so there are plenty to choose from, but as a general rule they all mean you’ll be paying above average prices for your gas and/or electricity. The truth is that consumers who have no choice but to use a prepayment meter are locked out of accessing the cheapest energy deals on the market.

When comparing, choose ‘prepayment meter’ as your method of payment and you’ll be presented with prepayment tariffs you can switch to. Alternatively, you can look around to see if you’re eligible to switch to a credit meter, which means you are billed for the energy you have already used, usually monthly, often by Direct Debit. Bear in mind that energy suppliers will often run a credit check as part of the switching process.

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