Do you pay more for gas on a prepayment meter?
While they can help to budget, you usually end up paying more for energy. In general, prepay customers have access to fewer tariffs, typically pay more for their energy, and are more likely to be in vulnerable circumstances than those paying by other means.
With an old-style prepayment meter you'll pay more than you would on the best direct debit deal. There are also fewer tariffs and suppliers to choose from. You won't find many energy tariffs on price comparison websites at the moment - this is because of changes in the energy industry.
From 1 October 2022:
The average daily standing charge cap is 46p for electricity and 28p for gas, for customers on default tariffs with typical usage paying by direct debit.
Prepayment tariffs are more expensive than ordinary meter tariffs, and energy firms can also dock debt from the top-ups. Households who cannot afford to top up their meter risk being disconnected from their power entirely.
In May 2022, Money Saving Expert noted that direct debit is usually 6% cheaper than other ways of paying. They also explain in their guide to prepayment meters: 'One of the main reasons prepayment meters are generally more expensive than standard credit meters is simply that they are more effort for the suppliers.
The most common and often the most effective method of paying your energy bill is to set up a direct debit. It means you don't have to worry about making any payments yourself, as long as you have enough money in your chosen bank account to pay the bill. You'll have the option to pay either monthly or quarterly.
What are the disadvantages of a prepayment meter? You could self-disconnect if you have not topped up your meter and used all your credit, including your emergency credit.
Prepayment meters are often used in households that have low incomes or are in debt and need flexibility managing their finances. Households pay in advance for the energy they use at a given time with a card that can be topped up at shops, or directly via smart meters installed in their homes.
Direct debits make your bill cheaper
Having a direct debit also makes it easier for energy firms to refund any overpayments made – as they'll have your bank account details on their systems. You then use this credit to reduce future payments or cover costs in colder months when you need to use more energy.
In normal times, you could still save money on a prepaid meter. Most energy providers will have at least one prepaid tariff on offer, so it may be possible to shop around for a good deal from your existing supplier.
What is a normal standing charge for gas?
How much do standing charges cost? Standing charges can range anywhere from 20p-80p per day for business gas and 5p-50p per day for business electricity. There is the option with some energy suppliers to have a “no standing charge” tariff, but a significantly higher unit rate usually offsets this saving.
Like other energy related social and environmental policy schemes, the Warm Home Discount is paid for through energy bills, rather than general taxation. And to ensure the schemes are paid for evenly amongst consumers, the costs are added to standing charges on energy bills.
There can be major repercussions for customers switched to prepayment meters. They are typically more expensive than traditional meters, although all tariffs are temporarily being capped by the Government.
With traditional prepayment meters, you need to manually top up a card or key at PayPoints. But with a pay as you go smart meter the process is simpler: you can top-up in a number of ways, which could include online, via telephone or text message, or even with a smartphone app.
|Cheapest Variable||Utility Warehouse||£161.26|
|Cheapest Fixed||British Gas||£219.82|
|Energy Price Cap||Most Providers||£164.25|
An Ofgem spokesperson told Moneysavingexpert.com: "Smart prepayment meters update prices automatically – so topping up in advance would not make a difference.
While the difference between the cash and credit prices at gas stations typically is much lower— about 5 to 10 cents a gallon, according to the National Association of Convenience Stores— there have been reports about stations' charging credit card customers as much as $1 more per gallon than those paying with ...
- Don't Top Off Your Tank. ...
- Check Your Fuel Cap. ...
- Don't Pay for Premium Unless You Have To. ...
- Keep Tires Properly Inflated. ...
- Rethink Where and When You Drive. ...
- Don't Speed. ...
- Look for the Best Prices.
1. Choose Credit. Like every tip on this list, this first recommendation is simple (and easy!). Even if you're technically paying for your gas with your debit card, when prompted to choose if the card you're using is a debit or credit card, always select “credit.”
If you prefer to stick to a prepayment meter, you might be able to save money by switching to a different supplier offering a prepayment tariff. However, the energy crisis means it's not a good time to switch suppliers at the moment – but it's something to bear in mind for the future.
What is the best way to save money on gas?
- Schedule Your Gas Run. Wednesday is typically the best day to fill up for less, says automotive expert Lauren Fix. ...
- Don't Top It Off. ...
- Pay With Cash. ...
- Use Loyalty Programs. ...
- Follow The 10-second Rule. ...
- Let Your Fingers Do The Driving.
You also don't need to send a meter reading in if you're on prepay, as you pay for your energy as you go.
4. You don't need to give a meter reading with prepayment meters. With prepayment meters, don't worry about meter reading day – you don't need to give a reading as you pay for your energy as you go.
What's the average electricity bill per month? The average electricity bill per year for 2021 (Opens in a new window) was £764, based on annual consumption of 3,600 kWh/year. That's £64 per month, an increase of 7.5% on 2020. In total that brings the combined average gas and electricity bill to £1339 per year.
Your supplier might have recently increased its prices. There's a limit to how much your supplier can increase its prices on some tariffs. This is because of the Energy Price Guarantee, which puts a limit on what most households pay for gas and electricity. Check how it affects your energy bills.