Prepayment Meters vs Credit Meters and Tariffs - Which one’s right for me?

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Disclaimer: The information on this page was last updated on 23/12/2022, 13:24:48

With so many different gas and electricity meters and tariffs to choose from, it can be hard to find the right one for your needs. Here, we’ve weighed up the pros and cons of each meter to help you decide. As always, we’ve got you covered.

What’s the difference between a prepayment meter and a credit meter?

The main difference between these meter types is the way that you pay. With a prepayment meter, you pay in advance for your gas and electricity. You’ll have to top up at your local PayPoint or Payzone, or some meters also let you top up online. However, a credit meter is paid by direct debit or on receipt of bill, depending on how much energy you’ve used. Your provider will use your meter readings to create your bill, whether you’re on a fixed or variable tariff.

The type of meter you have will determine the tariffs and even providers available for you to switch to. If you have a prepayment meter, you’ll often have a more limited choice of tariffs (if your provider offers any) which are generally more expensive than the tariffs available for credit meters.

What is a prepayment meter?

A prepayment meter is often compared to a ‘pay as you go’ phone – you top up your meter when you run out of credit. If you have a prepayment electricity meter, you’ll have a key to top up, or if you have a prepayment gas meter, you’ll have a card to top up.

There are 3 main places you can top up your prepayment meter:

• PayPoint
• Payzone
• Post Office

Prepayment meters are an excellent option for those who want to keep an eye on their spending. You know exactly how much you’re paying for your energy and by setting budgets, you’re not paying for more than you use. If you can’t get to the shop or run out of credit, you can claim £5 emergency credit on both your electricity and gas meters so you don’t lose supply, however, you’ll have to pay this back when you top up next.

Prepayment meter charges are made up of:

• A daily standing charge
• Your usage charge
• Any outstanding debt you might have

Despite almost 6 million UK households (over 20% of the population) having a prepayment gas or electricity meter, not all providers offer prepayment tariffs. If your provider does support prepayment meters, it’s likely they only offer one or two tariffs. However, they tend to be a more expensive option because they’re more hassle for your provider due to the irregular, manual payments and high admin fees on their end. With a prepayment meter, you won’t have to submit meter readings but you’ll still have to keep an eye on your meter to see how much credit you have.

Find out more about prepayment meters

What is a credit meter?

Credit meters are the most common type of electricity and gas meters used across the UK. If you have a credit meter, you’ll be billed regularly based on how much energy you’ve used. It’s usually paid by direct debit, but some providers offer cash and cheque payments too. With a credit meter, there’s no chance of running out of energy and being left in the dark, but more chance of overpaying for energy that you’re not using.

In order to receive accurate bills, you’ll have to submit your meter readings to your energy provider regularly. Depending on your provider and tariff, how often you submit your readings will vary, however, you’ll always have to submit your readings. Otherwise, you’ll be charged for how much your energy provider thinks you’ll be using, which could be more or less than you are.

Having a credit meter gives you a wider choice of tariffs, many of which aren’t available for prepayment meters. This means that there are a lot more options if you’re thinking of switching providers or cutting down on your energy bills. They’re the cheapest option for most households.

Which is better, a credit meter or a prepayment meter?

Both meter types have their pros and cons and reasons one might be better than the other. Everyone’s energy usage is different, so different meters are going to suit different people.

Meter type	Pros	Cons
Prepayment meter	No surprise bills Easy to budget You control how much you pay and how often Easy to repay debts £5 emergency credit if you run out You don’t have to submit meter readings	A lot more expensive Having to top up at the shop Your energy may be switched off if you run out of credit There are fewer tariffs to choose from You might be charged for a lost or damaged key/card
Credit meter	Cheaper Regular bills A wider range of tariffs to choose from Less chance of your energy being turned off Different ways to pay	Have to submit meter readings regularly Bills can vary in price Easier to go into debt Easier to be paying for more than you use Less likely to be accepted if you’re in debt

Can I change my gas and electricity meter?

Most of the time, yes. If you’re moving from a credit meter to a prepayment meter, you’re more likely to be accepted, however, going the other way can be slightly trickier. While your energy company might prefer credit meters, you might have to go through a credit check to make sure you can afford it. If you’re switching both your meter and provider, you might have to pay a deposit first – usually three months’ worth of payments.

Whether you have a prepayment or credit meter, you’d still be able to have a smart meter. Every home in the UK will be offered to upgrade to a smart meter, which is the preferred meter type by most providers. They’re a lot more convenient than both meter types as they’ll send your meter readings over automatically if you have a credit meter and let you top up online if you’re on a prepayment meter. No more rooting around in the dark cupboard or running to the shops late at night.

If you’re in debt to your energy company, they might suggest you swap to a prepayment meter to help pay off any money you owe. However, they’d be unlikely to let you change to a credit meter until your debt is paid off or under certain circumstances where it’s more convenient to have a credit meter. For example, if your meter is in a hard-to-reach place, if it could affect your health, or if it’s too difficult for you to get to the shop and top up.

If you rent your home, you normally don’t need permission from your landlord. You might have to pay the cost of changing it back if you move, however, more often than not, it’s free to do.

Find out more about different meter types

How do I change my electricity or gas meter?

Once you’ve decided you want to change your meter, the first thing to do is to contact your energy supplier to find out if you’re eligible. They’ll check your credit score, payment history, and any debts you might have with them. If you pass the credit check, they’ll send out an engineer to install your new meter. Depending on where you live and who your provider is, this could take between a couple of days and a few weeks.

Can I save with a credit meter?

We’ve looked at four of the biggest energy companies and compared their prepayment and credit meter prices for a Londoner on a dual fuel tariff using 3,100kWh of gas and 12,500kWh of electricity per year (correct as of 24/11/2020).

I’ve been told I can’t change my meter – how can I still save money?

If you’ve been told you can’t change your meter, there are still all kinds of different ways you can save money or improve your chances of being accepted.

To save money, you can easily switch tariffs or providers if you find one with a better deal or additional benefits. If you’re not sure where to start, give us a call on 020 3992 7717 and we can help you out.

All UK customers are required to be offered a smart meter, which is the preferred meter type for most providers. Smart meters work with both prepayment and credit meters and come with a small in-home display. This display shows you how much energy you’re using in real-time, how much money you’ve spent in the day, and how much credit you have left on your prepayment meter. By keeping your in-home display in a prominent place, it can make you more aware of your energy usage and encourage you to make changes to decrease this. Seeing how much you’re using per day can also make you more likely to change your tariff if you’re paying for more than you’re using.

This may sound obvious, but the easiest way to save money on your energy bills is to use less energy. It sounds hard, but there are loads of ways you can do this easily. By investing in more energy-efficient appliances, insulation, and upgrading your boiler, you can create a more efficient home, decreasing your energy usage. Some providers offer the Government-led ECO Scheme where you can benefit from free cavity wall and loft insulation and even a subsidised boiler replacement.

If you were declined your new credit meter because you have a low credit score, increase it! There are loads of easy, cheap ways to do this. Even something as simple as being on the electoral roll or checking your file for mistakes helps boost your score. If you’ve improved your credit score and think you’ll be accepted, don’t apply for your meter change too quickly, as this can damage your chances of being accepted too.

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