Why Prepayment Meters Can Cost You More Than You Think

In 2025, there be nearly 4 million UK homes that use prepayment meters for gas and electricity. With these meters, you have to pay for the energy before you use it. You can do this with an electricity key, a gas card, or a smart card. Most people top up these cards at the post office or a PayPoint shop.

While prepayment meters let people pay for energy in small amounts, they can often make energy bills higher than if you pay by Direct Debit or with a credit meter. Even though the energy regulator Ofgem has set new rules, many prepayment customers still do not have as many tariff options. They still face high standing charges and may get disconnected if they run out of credit.

Why Do Households Still Use Prepayment Meters?

Prepayment meters are in a lot of homes where people:

• Have had energy debt or owe money from before to their supplier
• Live in a rented house or social housing
• Want to pay small amounts to control your energy use
• Do not want to pay with a monthly direct debit payments

Some energy providers put in a prepayment meter as a last resort if bills are not paid. This stops the debt from going up, but it can keep families on options that are less flexible.

As of autumn 2025, about 11% of homes in England and 14% in Wales have a prepayment meter. These homes are often in cities or places where people do not have much money. Vulnerable customers feel the most impact from this. They are often elderly people, disabled people, or families with only one parent.

How Much Do Prepayment Customers Pay in 2025?

According to the newest Ofgem price cap for October to December 2025, the average home that uses prepayment pays about £1,672 each year for dual fuel. A direct debit customer pays around £1,720 each year. But direct debit customers can get cheaper fixed deals. These deals can be about £100 to £150 less than the price cap. So, even if direct debit looks more costly at first, most people who use direct debit pay less over the year.

Even though the standing charge is a bit lower if you use prepayment, there are higher costs for each unit. There are also fewer tariff options for you to choose. This means you might end up with bigger bills over time.

See how prepayment tariffs compare to Direct Debit deals →

Why Do Prepayment Meters Often Cost More?

The main reasons include:

• Fewer tariff options: Most cheap or fixed energy deals are for direct debit customers. Prepay users often pay the standard variable rates.
• Inflexible budgeting: You must top up as you go. There is no way to spread costs across the year with a fixed monthly payment.
• Standing charge deductions: A daily standing charge is taken from your balance, even if you do not use any energy.
• Debt repayment deductions: Any outstanding balance or fuel debt will be automatically taken from your top-ups.
• Emergency disconnection risk: If you run out of credit at night or on bank holidays, your energy supply may stop. You will need to top up before it starts again.

These problems make prepayment meters hard to deal with, especially if you do not get paid the same every month or have health needs.

How Does the Standing Charge Affect Prepayment Users?

The standing charge is a fee that helps pay for things like keeping the energy supply running, reading your meter, and supporting government schemes such as the Warm Home Discount. This charge does not change based on how much energy you use. It helps cover the cost to run and maintain the network so people can always get their energy when they need it. The standing charge also goes to things like making sure the Warm Home Discount can help the people who really need it.

Even when you do not use any gas or electricity, this set charge is still taken from your balance every day. If you do not top up now and then, you could end up with debt that you might not see building up.

Over time, the standing charge can really add up to your energy bill for the year. This is true, especially if you do not use a lot of energy at home. The amount of the standing charge means people can see a bigger bill, even when they do not use much power. For many, the standing charge plays a big part in how much they have to pay on their energy bill each year.

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What Happens When You Run Out of Credit?

If you use up all the amount of credit you have, your energy supply will be cut off. It will stay off until you add more money. Most suppliers do give several options to help you out for a short time.

Emergency Credit

• The service will be there if your balance goes below £0.
• You can normally get £5 to £10 for a short time.
• The money needs to be paid back when you put more into your balance.

Friendly Credit

• The device turns on by itself at night, on weekends, and on bank holidays. This helps stop it from being disconnected when the shops are closed.
• You still have to pay back the amount the next time you add credit.

Additional Support Credit

• Help is there for people who feel at risk or have health issues.
• You can get it after the energy supplier looks at your needs or you get help from Citizens Advice.
• Many times, help comes with repayment plans or when you get added to the Priority Services Register.

If you use central heating or have devices at home for health needs, your supplier must see cutting off your supply as the last resort. A site welfare visit has to be made before they turn off your power.

What Are the New Rules for Prepayment Customers?

In 2024–25, Ofgem made new rules. These are to help make things fair for people who use prepayment.

• There will be no forced meter switch installs without people agreeing or having someone check on their well-being first.
• A staff member must come to the home for a welfare visit before changing any meter.
• People who need help will get friendly credit and emergency support right away.
• Companies will have to give an affordable repayment plan to people before they try to collect any energy debt.
• Standing charges will be the same for prepayment, credit, and direct debit customers.

These changes came after there were cases last year where energy suppliers put in meters. But, they did not do proper checks before installing them. The Energy UK Vulnerability Commitment tells suppliers they must protect customers who are in vulnerable situations. This is to make sure that no one is without power when there is an unsafe condition.

Who Are the Most Affected Groups?

Prepayment meters are most common among:

There are studies that say people who use prepayment for energy are more likely to have trouble paying for fuel. A lot of people in these homes end up in the hospital more often. This happens because their homes get very cold after the energy is switched off.

How Do Smart Prepayment Meters Help?

Modern smart prepayment meters help fix many of the problems from old meters. You can top up online, with a phone, or by using mobile apps. You do not have to go to the post office or a shop now.

Key benefits include:

• The smart meter can take meter readings for you, so you get correct bills.
• You get alerts when your balance is low, so you can avoid disconnection.
• You can add money to your account from home by using your debit card or online account.
• With the smart meter and online account, you get the same unit rates other smart meter customers have.

Smart prepayment meters help suppliers give extra support credit or friendly credit right away, with no wait. This makes it easier for people to get the help they need fast.

Learn more about switching from prepayment to smart meter tariffs →

Can You Switch From a Prepayment to a Credit or Direct Debit Meter?

Yes. Most of the time, you can move to a credit meter or a Direct Debit plan if you want.

• You should not have any energy debt, or owe less than £500 for each type of fuel.
• You need to pass a basic credit check with your energy supplier.
• You must agree to pay a fixed monthly payment or set up a monthly bill.

Most suppliers will put in a new smart meter for you at no cost. You get to see how much you use in real time. It can also help you find better deals.

Compare energy prices for prepayment and Direct Debit tariffs →

What Financial Support Is Available?

There are a few plans made by the government and suppliers that can help people with paying fuel debt or their bills that keep coming in.

• Warm Home Discount: This gives a £150 cut on winter electricity bills for people who can get it.
• Priority Services Register: This is free help for people who need extra care, like having trouble reading their meter or needing a new way to heat their home if the power goes out.
• Energy UK Vulnerability Commitment: With this, the supplier will not disconnect you and will give flexible ways to pay your bill.
• Affordable Repayment Plans: You and your supplier can talk and agree on a payment plan that fits your money situation.
• Citizens Advice Energy Debt Help: You can get free help on energy debt and changing to a safer payment method with Citizens Advice.

When Might a Prepayment Meter Be a Good Option?

Most people with homes save money by using direct debit payments. Even so, paying in advance can still be good if:

• You like to know how much energy you use.
• You do not want to get a monthly bill. Maybe you rent for a short time.
• You use small amounts of energy at some times. For example, in a holiday home.
• You do not have a bank account. Or you want to skip credit checks.

If you often add a lot of money to your account or have a hard time having enough credit, switching to the smart meter can help you save money.

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How to Compare Energy Prices for Prepayment Tariffs

To get the best prepayment deals, you should put your top-up record or how many kWh you use into a trusted tool to compare energy prices. This way, you will know which company is good for you. It helps you get the right deal for your home.

Make sure you put in your payment method, the type of meter you use, and details from your online account. This will help work out the total cost. You can see both the unit rates and the standing charge. By doing this, you can find out which tariff is best for the way you use energy.

Compare energy prices for prepayment tariffs and smart meter deals →

FAQs About Prepayment Meters