People in the UK tend not to switch energy suppliers unless they are forced to do so, and this means energy suppliers have little motivation to offer you the best price they can once you have already signed up. New customers get all the great deals and existing customers are rarely offered price decreases or better options than when they signed up. Doing an energy comparison is harder when you have an unusual type of meter like a prepayment meter.
If you’re seeking better prices so you can save money each year on your energy bills or you’re considering moving into a house with a prepayment meter, it’s important to understand the differences in pricing energy use for these meters. Credit meters may seem like they would be more expensive, but it’s typically the other way around. Here’s what you need to know.
Prepaid Meters Are Almost Always More Expensive
Although one major myth is that prepayment is cheaper and easier to budget, you’re typically on one of the most expensive tariffs when you have a prepayment meter. You can’t choose between discounted, green, dual fuel, and other types of discounts, which means the price you pay is significantly higher than average – likely somewhere between £150 and £300 per year.
Suppliers Can Force You To Accept A Prepayment Meter
Many homes are fitted with prepayment meter because the homeowner failed a credit check. If you can’t get a credit meter so you can take advantage of monthly or quarterly credit billing, suppliers can force you to accept a prepayment meter instead. Even if you have an existing credit plan, if you fall behind on payments, suppliers can forcibly switch your meter by entering your home (with a warrant, which they will charge you for, if necessary).
To avoid being switched to a prepayment meter, make sure you make your best effort to pay off any debt you might be in or arrange a payment plan with your provider. Having a good credit record makes you eligible for better tariffs on credit meters.
Many With Prepayment Meters Are In Debt
About one in five UK households are currently in debt to their energy supplier – and with energy prices rising rapidly, it makes sense. You will have to add more credit to your account when you have a prepayment meter because part of the credit goes towards paying off your bill, while the other part goes towards actually fuelling your home. If you run out of credit on your account, you will have to press an emergency credit button on the meter in order to have your power switched on until you can refill your card or key. This requires going to a local shop that sells top-ups as soon as possible, so you’d better hope it isn’t a bank holiday!
You Can Ask To Have Your Meter Switched
If you have a prepayment meter, either from having fallen behind and wound up in debt yourself or from moving into a home with one, you can ask to have it switched. Several major energy companies will do it for free, including British Gas, EDF Energy, and E.ON. You may need to pass a credit check and have no outstanding debts to an energy company first, however. After your meter is switched, an easy energy comparison will reveal the cheapest tariffs available.
Changing Suppliers With A Prepayment Meter Doesn’t Pay
While customers who are on credit meters can often save a significant amount of money by switching suppliers, customers on prepayment meters will notice that there isn’t much money to be saved – perhaps £100 a year at most. The tariffs are relatively fixed because each company typically offers one expensive tariff for all prepayment customers. It’s better to focus on paying off any existing debts before requesting a switch to a credit meter.
If you’re trying to save money on household bills, it makes sense to cut back on your energy bills wherever possible. It’s much trickier to do so if you have a prepayment meter, however. Companies tend to take advantage of customers who are forced to accept prepayment meters. Your tariff is likely too high if you’re on a prepayment meter, so look for an opportunity to switch to a credit meter at the earliest opportunity.
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Laura Ginn knows that comparing prices is the easiest way to discover whether you are paying the best price for your gas and electricity. Not only can you use them for energy comparison you can also switch energy supplier with uSwitch.com.