Prepay energy is definitely not the cheapest way to power your house, but savings in the £100s are possible. Switch to save - now's the perfect time.
This is a full step-by-step guide to cutting the cost of gas and electricity for prepayment meter users, including top comparisons, the costs of switching meters and social tariffs.
- £90 cashback on BG's Clear & Simple
Via comparison Energyhelpline
- Cheap Energy Club + £30 cashback
Our tool ensures no-hassle cheap energy
- Compare + £15 cashback (single fuel)
With top pick Energyhelpline
- Compare + £30 dual fuel cashback
Or go for freebies incl 6 bottles of wine
- Also see: Cheapest Gas & Electricity
Prepayment meters are energy meters for gas and electricity that allow you to pay for your energy on a pay-as-you-go basis. Over four million UK homes use them.
You top up your energy via a key or card, which you can credit at newsagents, post offices and garages or sometimes online. While they can help to budget, you usually pay more for energy.
Switching to a cheaper prepay tariff can save you £50-£200 - but the timing is crucial. Switch during a round of price hikes and you can end up moving from the frying pan to the fire.
All the big six energy providers have recently hiked prices, so now's the perfect time to switch.
|These have hiked prices:|
|Scottish & Southern Energy (SSE)
9% gas & 9% electricity rise
(15 Oct 2012)
7% gas, 7% elec rise
(3 Dec 2012)
|British Gas & Scottish Gas
6% gas and 6% elec rise
(16 Nov 2012)
8.8% gas, 9.1% elec rise
(26 Nov 2012)
10.8% gas and 10.8% elec rise
(7 Dec 2012)
8.7% dual fuel, 7.7% elec only & 9.4% gas only
(18 Jan 2013)
Time To Switch alerts service: We'll warn you in the free weekly email whenever the switching status changes
Switching prepay tariffs works in the same way as switching on a credit meter, though competition is limited. Prepay users often pay more for energy and have fewer options. Yet we're pleased to see one comparison's offering a big cashback deal.
British Gas's tariff is only £40 cheaper than average for a typical user, but until Tuesday 9 April, switch to it via comparison site Energyhelpline's Huge Switch* and you'll get £90 dual fuel cashback - £65 will be paid around 3 months after switching, £25 12 months later. If you're an existing British Gas customer and switch to this tariff, you'll also get the cashback.
The very cheapest prepay deal is Spark Energy, yet we've very poor feedback on it, so we think British Gas with cashback is a good option. Either way, the link above will give you a full comparison of all of them. Make sure you see the text "***EXCLUSIVE: £90 CASHBACK!***".
Our Cheap Energy Club tool makes switching as easy as possible and helps you get no-hassle, permanently cheap gas and electricity. All you need to do is tell it where you live and how much energy you use, then we'll tell you if you're overpaying on your current deal or if there's a cheaper alternative.
But the best bit is we'll keep monitoring your tariff for you every month to ensure you're always on the best deal. Plus if we can switch you, you get £30 cashback.
Cheap Energy Club doesn't work perfectly for those that have one credit meter and one key/card meter. If that's you, it may be easier to use the comparisons below.
- Overall top comparison service. £15 cashback per switch
Our top pick, based on historical reliability, feedback and research, is Energyhelpline*, which pays £15 cashback (once) per switch whether separate gas and electricity or dual fuel.
- Alternative top picks for freebies. £30 cash, £35-40 wine
For a dual fuel switch - getting gas and electricity from one provider - you can get bigger freebies (one per household). Yet don't assume dual fuel is always cheapest. Check whether getting separate gas and electricity can undercut it, as it often can.
£30 cashback: MoneySupermarket*
6 bottles of wine (worth c.£35-40): uSwitch*
By specifically clicking via these special MoneySavingExpert.com links to get to the comparison sites and not going direct, you also get paid the cashback or freebies on top, provided they can switch you (why they pay). It's usually paid in 45-90 days.
Remember you can still switch if you are in debt with your supplier. This debt will follow you to the new supplier.
If you've less than £500 debt, you can still switch supplier
The very cheapest energy tariffs are online deals for those who have credit meters. These measure your usage, then you receive a bill or pay by direct debit afterwards, giving you credit rather than making you pay in advance.
- Typical average prepay meter cost: £1,395
- Typical cheapest prepay meter cost: £1,230
- Typical cheapest credit meter cost: £1,140
Correct as at March 2013. Based on average consumption for a typical house using a 'medium' amount of energy. Source: Energyhelpline.com
You'll often hear "prepay users don't pay more now" - that's compared to bog-standard tariffs with normal bills. Bill meters offer a wider choice of tariffs including cheap online deals, direct debit discounts and more. It's simply a more competitive marketplace.
Things are better, but it's still an outrage some with prepay are among society's poorest. Others use the least energy, yet pay more. If you can, ditch and switch to a credit meter.
Before you take the plunge and consider switching to a credit meter, bear in mind:
You may be credit checked
Providers usually fit prepay meters because they think you're a credit risk. If you're moving into a property with a prepay meter, but have a good credit history, it should be easier to ditch it.
If it was fitted because of payment problems, you'll need to prove your creditworthiness. Any external credit checks via credit agencies will appear on your credit file and may affect future applications. See the Credit Rating guide for full info and tips on how to improve it.
A new meter might cost
Some providers charge anything from £50-£100 for swapping to a credit meter. Your savings from moving can be over £200 so should offset the cost eventually, but of course it may mean finding the cash in the short term.
You may have to pay for the meter if you change supplier
The provider may charge you for the free meter if you switch away to a different supplier before 12 months, so it can recoup its costs.
It can't dictate which tariff you opt for though, so make sure you switch to its cheapest tariff (online tariffs are usually cheapest - see Cheap Gas & Elec for more info).
It's easier to get into fuel debt on a credit meter
Prepayment meters have the advantage of budgeting. You know what you're spending, when you're spending, and it's an incentive to keep energy usage down. While for most the savings from lower rates will outweigh this, it's worth thinking about it before attempting a switch.
How to get a credit meter for free
If you think a credit meter is right for you, follow these steps.
Find out how much your provider will charge to ditch your meter
As you can see from the table below, some suppliers remove prepay meters and install bill meters for free if you meet their requirements, so it's always worth asking. Though almost always, you'll need to have paid any existing debt off
|How much does your existing provider charge for a meter?|
|Energy supplier||Meter cost||What are the requirements?||Do you have to stay with the supplier?|
|Free||It checks your account history first. If there isn't enough info, it checks your credit file - you must pass the credit check.||No, and you don't have to pay for the meter, even if you switch to another supplier shortly after the swap.|
Can be free, so ask.
|Past account history is reviewed to ensure you won't build up debt and you need to have been clear of debt for 12 months.||No.|
|Past account history is reviewed to ensure you won't build up debt. A credit check is also done. If it thinks you're a risk, it may ask for a deposit which will be returned in 12 months with interest.||No.|
|An Experian credit check and an agreement to set up a direct debit.||No.|
|Free||No credit check (but it says this may change soon).||No.|
|Free||An external credit check.||No.|
|Correct as at March 2013.|
NOTE: All info is confirmed with the suppliers but switching to credit meters is at their discretion, so please tell us about your experience in the discussion.
In receipt of benefits or have a medical condition?
If you haven't been able to get a credit meter for free and fit into either of these two groups, it may still be possible to swap.
In receipt of benefits? A Government scheme, Fuel Direct, lets you pay your bills directly from your benefit allowance. To be eligible for the scheme you have to be be in debt to your energy supplier for at least one fuel type for more than £71.
Up to £3.55 can be deducted to cover arrears and current consumption. Energy suppliers may agree to remove a prepay meter if you agree to sign up to Fuel Direct. None have confirmed this and say it's decided on a case by case basis, but it's worth trying.
Medical condition? According to Consumer Focus, if you have mobility problems or if you are reliant on electricity for medical reasons, eg, to run breathing apparatus, you may be able to get your prepay meter removed.
Threaten to leave if it isn't free
If you've passed the credit checks which should, in theory, make you a desirable customer, but are still being asked to pay for removal of the meter - threaten to switch to another prepayment meter provider. Some suppliers may waive the charge to keep your custom.
Move to a provider that will give you a credit meter for free
If you can't get a free meter from your own provider, consider switching to get a prepay tariff with one of the suppliers that does offer free credit meters.
However, Ofgem rules state that if you have more than £500 debt with a supplier, you can be stopped from switching.
Remember, there's no guarantee that if you do switch to another company, it will then allow you to get a credit meter. So if you're going to do this, use the chart above in conjunction with finding a cheap prepay provider to ensure you won't end up paying a lot more on prepay if you don't ditch the meter.
It may be best to wait a few months to build up your history with the company.
Ditched your prepay meter? Tell us how it went!
Is it worth paying for a credit meter?
If you've tried everything to get a free credit meter and can't, it still may be worth paying, though it's NOT worth getting into debt for.
The cheapest prepayment meter tariff costs, on average, £1,230/year. Yet the cheapest tariff for online customers is currently around £1,140, a saving of around £90, more for some. Balance the saving with the cost of swapping meter to help you decide.
As a rough rule of thumb, if you'll live there over two years and you're not struggling financially, it can be worth paying for a credit meter.
Never had a credit meter before? Quick tips
Credit meters are usually cheaper than prepayment meters, but it takes more effort to stay on top of bills. When you switch over, make sure you do the following:
Once you've switched, ensure you're on the cheapest tariff
Don't assume you're on the cheapest tariff. In fact, it's likely the energy company will put you on a costly one. If you have to stick with one supplier to avoid paying for the meter, speak to it to ensure you're on the cheapest tariff. Or do a comparison looking at only that provider.
If not, then you need to do a full market comparison - the overall winner depends on where you live and how much energy you use. To speedily find it and get cashback, see the full Cheap Gas & Elec guide.
Every time you receive a bill, do a meter reading
Don't rely on your energy provider's estimates, these are often way out. If it's under-billing, you'll have a big whack to pay at the end of the year. If it's over-billing, then it's unfairly got your cash.
If your direct debit is way off kilter, call up and request it's changed. You have a range of rights to ensure it's correct. See the full Energy Direct Debits guide for template letters to help.
Paying by direct debit is much cheaper
Pay by direct debit and it means you won't miss any bills. Plus you get a 5-10% discount, though make sure you send regular meter readings as above so the direct debit is set at an accurate amount.
If you're struggling to pay, speak to your provider
Four of the big six providers offer schemes for account holders in hardship, to help cover energy arrears and sometimes other essential household items. Essential items are covered by Further Assistance Payments and can include white goods, boiler repairs or funeral costs. Those who live in a home supplied by the provider, but are not account holders, can apply for the Further Assistance Payments only.
You need to complete a full income and expenditure budget sheet along with proof of your income. Give details on how your arrears have built up, eg, due to illness or redundancy, and say how the grant will help you. It can take several weeks to process your claim, but you can be entitled to £1,000+ in support.
Links: British Gas Energy Trust / EDF Energy Trust / Npower Energy Fund
Energy suppliers are obliged to help those in hardship. In the past this has been in the form of a social tariff which offers a discount off standard prices. However this has been replaced with the Warm Home Discount.
The Warm Home Discount came into force on 1 April 2011 and requires suppliers, by law, to help vulnerable customers pay for energy.
It replaces the voluntary tariffs offered by suppliers. It's mainly aimed at those who get pension credit. Suppliers also offer it to a wider group, although this is at their discretion so call up and find out what your supplier will offer you.
Those who are eligible will get at least £135 towards bills from their energy supplier.
Use less energy. It's not just who you pay, but how much you use. Cutting energy is a mix of big and little things.
Turn down the thermostat and wear jumpers, turn lights off when you leave a room, use energy-saving light bulbs, defrost the fridge and check it's not on too high, don't leave electrical goods on standby.
For more info, read the Energy Saving Hunt discussion and see the Energy Saving Trust website.
Don't use emergency credit too often. Most suppliers provide around £6-10 emergency credit after your top-up runs out. But when you dip into the emergency credit it doesn't charge you the standing charge (the fixed charge you pay daily just to be connected), so the next time you top up you have to play catch-up, which can throw your budgeting out.
Going away? Make sure you top up enough. If you're going away, you need to leave enough credit on the meter to cover the daily standing charge, even if usage will be low. Otherwise you may find your credit runs out and appliances switch off while you're gone.
Moved house? Tell your supplier immediately. If you've moved into a home with a prepayment meter, notify the existing supplier immediately and don't use the old tenant's top-up card.
Otherwise you may end up having to pay someone else's debt just to get an energy supply. The supplier must, under a code of conduct, reset the meter as soon as reasonably possible.
Ignore doorstep sellers. There's been a recent scam involving doorstep sellers selling fraudulent top-up cards. The cards, normally sold in £50 denominations for the price of £25, don't work and so it'll be totally wasted cash.
- Prices are going up, so look at topping up now. This depends on your provider. But with British Gas, for example, the price charged by the meter won't increase until the first time you top up after the price hike. Anything you use prior to that first top-up will be charged at the old rate. As there is usually a maximum top-up, the benefit of this will be limited.
This is the first incarnation of this guide. Please tell us how you find this info and if anything needs improving.