Switching from a Prepayment Meter to Direct Debit
For some customers, a prepayment energy tariff can be a good way to budget and stay on top of energy costs. However, switching from a prepayment meter to Direct Debit could help you save money and access some of the cheapest gas and electricity deals on the market.
What is a prepayment meter?
Prepayment meters let you pay for electricity and gas in advance by adding credit to the meter using a special key or card. While this may be a great option for those who like to budget and know how much they are spending on energy ahead of time, prepayment gas and electricity tariffs are typically a lot more expensive than fixed-price tariffs on a credit meter.
In 2017, market regulator Ofgem introduced its energy price cap to limit the maximum amount that suppliers can charge customers on prepayment tariffs. This is updated every six months and stands at £1,070 per year for the period from October 2020 to March 2021.
Unfortunately, households with prepayment meters still generally have to contend with some of the least competitive gas and electricity prices on the energy market. While you could end up paying a little less by changing tariffs on a prepayment meter, the real savings are to be had by those switching from a prepayment meter to Direct Debit payment.[block:energy_payg_content2]
What is a credit meter?
Credit meters are the most common type of energy meter. The meter measures how much gas or electricity you use and then your energy supplier bills you a fixed monthly amount based on an estimate or meter reading. These meters are also known as Direct Debit meters, as this is the most common - and cheapest - way to pay for energy on a credit meter tariff.
For many, using a credit meter can also be a more convenient option, as there is no risk of running out of credit and therefore no need to go to the shops to top up.
Can you switch from prepayment meter to Direct Debit?
Provided you are debt-free, you should have no problem changing out your prepayment meter for a regular credit meter. The Big Six energy providers will do this for free, though some smaller suppliers may charge a small fee. However, this is likely to be negated in the long run due to the money you'll save on a standard meter.
Whether switching from a prepayment meter to Direct Debit payments is the best option for you might not be quite as clear cut as seems at a glance. That is why it is better to break down the advantages of each kind of payment method for your energy savings.
Pros and cons of switching from a prepayment meter to Direct Debit payments
|You don’t need to worry about inaccurate estimates when you are on prepayment.||Prepayment tariff customers are amongst those with higher energy rates.|
|Prepayment tariffs have far fewer billing errors than direct debit fixed tariffs.||Prepayment meter tariffs are £150 more expensive than direct debit tariffs, on average.|
|Customers switching from a prepayment meter to Direct Debit payments generally get the best electricity and gas prices per unit.||But it is easy to forget how much energy you use and end up spending more on Direct Debit.|
|Standing charges are also lower when you are on a direct debit fixed tariff.||It is very easy to get into debt with direct debit tariffs.|
Is Direct Debit cheaper than prepayment meter?
Customers on prepayment meters are much more limited in the number of tariffs they can choose from, compared to those on credit meters. As a result of this and the Ofgem price cap, there is less need for suppliers to offer competitive prices. Let’s take a look at the five cheapest prepayment tariffs, followed by the five cheapest tariffs available on credit meters.
For our comparison, we have chosen a typical three-bedroom household in the South East of England with average energy usage. While these tariffs should give a good idea of what is available on the market, the best way to find the cheapest deals in your area is by speaking to an energy expert. Call us now for free on 020 3936 0059 or get a free callback now to compare gas and electricity suppliers and find out which could save you the most money.
Unsure how much energy you use at home?Use our handy online energy consumption calculator to see how much energy you use every year. Simply enter the number of bedrooms and occupants in your home, whether you use gas or electricity to heat your house, water and cook, and we’ll tell you how much energy you use.
Top 5 Cheapest Prepayment Tariffs
|Supplier||Tariff||Monthly cost||Annual cost|
|Omni Energy||Omni Prepay Variable||£79.92||£959.04|
|People’s Energy||The People’s Prepay||£81.52||£978.24|
|Orbit Energy||Prepayment Orange||£85.15||£1,021.80|
|E Energy||1 Year Reward Smart||£86.88||£1,042.56|
*Information correct at time of writing. All quotes are prepayment dual fuel tariffs and based on comparison for a three-bedroom house in the South East with an average annual electricity consumption of 2,900kWh and gas consumption of 12,000kWh.
Top 5 Cheapest Credit Meter Tariffs
|Supplier||Tariff||Monthly cost||Annual cost|
|Simplicity Energy||2020 Cabbage||£67.83||£813.96|
|Outfox the Market||Fix’d 20||£69.64||£835.68|
|Utility Point||Just Join UP 12M Fixed||£71.29||£855.48|
|Powershop UK||Top Shopper 2020||£71.33||£855.96|
|Green Network Energy||GNE Summer Sizzler Green||£72.34||£868.08|
*Information correct at time of writing. All quotes are dual fuel tariffs paid monthly by Direct Debit where possible and based on comparison for a three-bedroom house in the South East with an average annual electricity consumption of 2,900kWh and gas consumption of 12,000kWh.
In our price comparison, the cheapest credit tariff came out at £145 less than its cheapest prepayment alternative. However, depending on your own living situation and energy use, you could save even more.[block:energy_tariffs_content1]
How do I change from prepayment meter to credit meter?
- Decided that a credit meter is right for you? The first step to switching from a prepayment meter to Direct Debit payment is talking to your current energy supplier. Don't forget to have your supply and meter numbers handy when you speak with them.
- Not everyone is eligible to switch from a prepayment meter to a credit meter and your supplier typically won’t replace your meter if you’re in debt to them. If your account is debt-free, your supplier will often first run a credit check to ensure that you can keep on top of monthly Direct Debit payments.
- Once you pass the credit check and agree a new tariff your supplier will arrange a time for an engineer to remove your prepayment meter and replace it with a credit meter. The timeframe for this can vary, though should take no longer than a couple of weeks. If your home has a smart meter, the switch over will be instant.
When switching from a prepayment meter to Direct Debit, you’ll find yourself with a lot more energy tariffs to choose from. Find out the best deals in your local area by speaking to an energy expert on 020 3936 0059 or get a free callback now.
Prepayment meter debt
Generally, you'll money by having a standard meter and switching to a fixed tariff where you can pay for your energy by Direct Debit. However, before you can switch you need to make sure you will not be liable for any prepayment meter debt.
Here are the main reasons why you might have debt that is stopping you switching from a prepayment meter to Direct Debit payment.
- If you’ve just moved into a new home, the previous resident could have built up debt on the meter. To avoid potentially being liable for someone else’s debt, you need to contact the energy company currently supplying the home and let them know you have just moved in.
- If you dipped into the emergency credit on a prepayment meter you will have built up daily standing charges for however long the emergency credit was in effect.
- Once you go into emergency credit on a prepayment meter, you have to top up to pay back the emergency credit as well as as a little more to stay in good standing moving forward.
- Your top-up amounts have not been enough to sufficiently cover both standing charges and your energy consumption. If this happens for long enough, those unpaid standing charges start to build up.
- Your home was fitted with a prepayment meter so you could pay back energy debt according to an agreed payment plan. If this is the case, part of every prepayment top-up will go towards lowering what you owe.
Be aware that if you owe money to your energy supplier, it can stop you switching from a prepayment meter to Direct Debit payment. However, if you owe less than £500 and have agreed on a payment plan to clear your debt, you should be able to switch without any problems.[block:energy_distribution_content1]
How much does it cost to change from prepayment meter to credit meter?
Each supplier has its own policies when it comes to switching from a prepayment meter to Direct Debit payment. While some smaller providers may charge a small fee to remove your old meter and install a new one, the 'Big Six' will carry out the work for free, provided you meet certain criteria.
- British Gas, Npower and SSE all require a credit check before they can tell you whether the prepayment meter can be replaced for free.
- On the other hand, EDF Energy and E.ON will remove a prepayment meter for free but only if you have been a customer with them for 12 months (EDF) or a credit check (E.ON)
- EDF Energy won't do a credit check but, at the same time, will not change the meter if you owe more than £500.
- E.ON could charge you for any credit checks they deem necessary. If you are in debt or if you cannot pay future bills by Direct Debit, they may decide to charge you for the meter change.
- Scottish Power is the most stringent by requiring you to be a customer with them for a full year and that you pay by Direct Debit moving forward. Even then, they might still charge you a cash deposit, refundable after the first year, and a prepayment meter removal fee.