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 for pay as you go energy. 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 more expensive than fixed-price tariffs on a credit meter.
There are currently about four million prepayment meters in the UK, and are quite common in rented homes. Whilst some people request a prepayment meter to be installed, usually it's suppliers that will install a meter for pay as you go energy after a customer has fallen into debt with their electricity or gas bill.
Customers with a prepayment meter can top-up at corner shops, supermarkets, garages, Post Office branches, or anywhere you can find a Paypoint or Payzone - Some suppliers such as British Gas only offer Payzone, whilst others may offer both options.
If you have a smart meter, you can also top-up your prepayment meter over the phone with a credit or debit card, or via your energy supplier's app, if they have one.
What is a credit meter?
A credit meter is 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 monthly amount based on an estimate or meter reading.
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.
Customers also have more choice when it comes to comparing energy tariffs as there are far more choices to choose a great deal with a credit meter than a prepayment meter which generally only have one tariff which is a variable-rate tariff.
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. To find out if you can switch out your prepayment electric meter or gas meter, you should contact your energy supplier.
Each supplier sets its own conditions for customers switching from prepayment meter to Direct Debit. For example, British Gas stipulates that you must be the account holder, over 18 and not had more than £50 debt in the last 12 months, whilst E.ON on the other hand, will simply run a credit check.
I have a bad credit score, can I switch from prepayment meter to direct debit?
It depends on how bad your credit score is. When you request a credit meter, the supplier will run a credit check to see if they're able to set you up with direct debit.
To increase your chances of passing the credit check, you can try some of the following tips to help your credit score:
- Register on the electoral roll: If you're not registered to vote at your current address, this can affect your credit score as you're not officially registered at your address.
The good news is this is an easy fix. You can either register online or by paying a visit to your local town hall. It's free to register and should take about five to ten minutes if you do it online.
- Get a credit card with a low limit: Credit cards, if used responsibily, can be a great way to boost your credit score. Having a low limit will reduce the temptation to overspend and if you pay it off in full every month, you'll soon see improvements to your credit score. You can check out our banks guide to find the best bank account for your circumstances.
- Close unused credit card accounts: If you have too much available credit this can go against you in a credit check as you could potentially use that credit to get into debt. Close any accounts you don't use, or request your limit is reduced.
- Wait at least three months: If you've been rejected for a line of credit in the last three months, wait a while before applying again. Not only for your switch from a prepayment meter to a credit meter, but for any type of credit. Having several rejections for credit in a short space of time can also negatively impact your credit score. Three to six months between applications is recommended.
How do I change from prepayment meter to credit meter?
- 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 on 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.
How much does it cost to switch from a prepayment meter to a credit meter?
Whilst some suppliers may charge you to change your prepayment meter to a credit meter, none of the Big Six suppliers do. So, if you're supplier is going to charge you to switch out your prepayment meter, you could switch your supply to one of the Big Six.
What is the Big Six? The term Big Six refers to the six biggest energy suppliers in the UK. Currently, the Big Six suppliers are British Gas, EDF Energy, E.ON, Scottish Power, SSE, and Ovo Energy. Previously, Npower was part of the big six, but they have since been aquired by E.ON.
Prepayment meter debt
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 from 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. You can request they clear the meter, they will give you a code to get a new top-up key or card from your local Payzone, Paypoint, or Post Office.
- 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 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.