What is a prepayment meter?
A prepayment meter is a pay-as-you-go energy meter that lets you pay in advance for the gas and electricity you use. It can be a useful option if you’re on a tight budget and need to manage your energy costs carefully, although you’ll need to keep it topped up to avoid running out of credit.
Using a prepayment meter is an alternative to monthly direct debits or paying every three months when you receive your bill. Historically, prepayment had been the most expensive way to pay for power, but this has changed recently due to intervention by the government and the energy regulator Ofgem.
How does a prepayment meter work?
Many people now have smart prepay meters, making it easier to add credit online or through a smartphone app. Other ways to pay include through a key, token or smartcard that can be topped up at Post Offices and shops with a PayPoint or Payzone facility.
You update your balance by inserting the key or card into your meter. As you’d expect, the more energy you use, the quicker the credit runs down.
With a prepayment meter you also have to pay a standing charge, so even if you don’t use any power your credit will still be used to pay for this.
Charges vary from region to region and supplier to supplier, so how much you pay will depend on the tariff you’re on, where you live and which provider you use.
Does the energy price cap apply to prepayment meters?
Just like standard variable energy tariffs, prepayment tariffs also have a price cap. This limits how much suppliers can charge you for each unit of energy used. It’s set at a different level for prepayment meters than for standard credit meters, based on what a typical household would use.
From 1 April to 30 June 2025, the prepayment price cap level has been set at £1,803 by energy regulator Ofgem. This is up from £1,690 between January and March 2025.
However, the price cap is not a limit on how much you’ll pay – that still depends on how much gas and electricity you use.
Find out more about the energy price cap.
Can I have a smart prepayment meter?
Most energy providers can upgrade your existing meter to a smart one for free if you haven’t got one already. If you’re renting a property, you’ll need the landlord's permission to change the meter.
Smart meters send readings directly to your energy provider and come with an in-home display. This allows you to see how much energy you’re using in real time in pounds and pence.
There are other benefits too, like being able to top up your account online or via an app. This means there’ll be no need to go to the shops to add credit as it will all be done remotely, and you won’t have to mess around with inserting keys or cards into your meter. You’ll also be notified if you’re about to run out of credit.
If necessary, a smart meter can also be switched between prepay and credit mode remotely by your supplier.
Some older smart meters may no longer work properly if you switch supplier, but work is being done to remedy this in the longer term. Your new supplier might also be able to fit you with a new working smart meter.
Why do I have a prepayment meter?
Prepayment meters are sometimes used by people who’ve had problems paying their energy bills in the past. That’s because it may help them keep track of exactly what they’re spending.
A prepayment meter can also be used to help repay outstanding debts to your energy supplier. For example, if you add £20 to a card, you could pay £5 towards the existing debt and use £15 for new energy, once you put the card in the meter.
In some debt situations an energy company might insist on installing a prepaid meter, but this shouldn’t happen to vulnerable customers.
If your supplier wants to install a prepayment meter, it’s a good idea to seek help from Citizens Advice so you can understand what your rights and responsibilities are – and the best way to find a solution that’s satisfactory to both sides.
Some landlords choose to fit meters in rental homes to avoid receiving unexpected, unpaid bills with interest when tenants leave a property.
What are the pros and cons of prepayment meters?
Prepayment meters suit some people who need complete control over how much they spend on energy, but they’re not right for everyone, especially if you’re looking for a great deal.
Advantages
For some people, it’s easier to manage your finances if you’re in debt or struggling to budget
No large, unexpected bills to pay
No credit check or bank account needed.
Disadvantages
Topping up can be inconvenient if you don’t have a smart prepay meter
Best energy deals not available to prepayment customers
Lost cards or meter keys can cause problems
You can still build up debt through standing charges, even if you’re not using any power.
Does having a prepaid meter make energy cheaper?
Historically, prepayment meters charged a higher unit rate to reflect the additional costs involved in managing the prepayment system. But the government stepped in during the energy crisis to cover the difference while a longer-term solution was found via regulator Ofgem. So now costs are similar to those of people paying by direct debit.
The latest energy price cap means that typical prepay rates will, in fact, be slightly cheaper at £1,803 compared with £1,849 for the average direct debit customer. This continues an unprecedented trend of prepayment meters being the cheapest option for a typical user, although direct debit customers might still be offered the best fixed deals.
Can I save money by switching prepayment plans?
In more stable economic times, before the energy crisis caused by the invasion of Ukraine, it was possible to save money by switching to a cheaper tariff. But volatility in the energy market has meant a shortage of competitive deals.
However, most energy providers will have at least one prepaid tariff on offer, so it may be possible to get a cheaper deal from your existing supplier. If they only have a single prepaid tariff, you can shop around to see if a better-priced tariff might be available from a different supplier. You can’t switch if you owe more than £500 per fuel though.
Take a look at our energy saving tips for more ways to save on your energy bills.
Can my supplier make me have a pre-payment meter if I’m in debt?
Forcing you onto a prepayment meter should only be a last resort, and your supplier must have explored all other options to recover the debt first.
The practice of forcing people onto prepayment meters hit the headlines when stories emerged of debt agents entering people’s homes to fit pay-as-you-go meters against their wishes. This led to Ofgem introducing new rules in 2023 outlining when suppliers can and can’t force prepayment meters on households.
Prepayment meters can’t be force-fitted by suppliers in households where:
Someone is aged 75+ and has no support in the home
There are children under the age of two living in the property
A constant power supply is necessary for medical reasons
Someone has a disability or illness that prevents them from being able to top up.
There are also rules for those who have a serious mental health condition, are recently bereaved, have children under five or are pregnant.
If you’re in debt, you must be given a chance to pay off what you owe before a prepayment meter is installed.
You can see the full rules that suppliers must follow for installing prepayment meters for customers in debt on the Ofgem website.
What support is available for prepayment customers?
If you can’t afford to top up your meter, you should contact your supplier as soon as you can. Under Ofgem rules, they must offer you support, whether that’s in the form of payment breaks, access to hardship funds or reviewing your existing plan.
You could also get help through a scheme called Breathing Space. This gives you 60 days’ respite from creditors so you have time to arrange a debt plan.
Help with energy bills is also available through the Household Support Fund, a government scheme that was extended by a further six months in March’s Budget.
Some 800,000 people in Britain went more than 24 hours without gas or electricity last year because they couldn’t afford to top up, analysis by Citizens Advice shows. If you’re struggling to top up your prepaid meter, see our guide on what to do if you can’t afford your energy bills.
FAQs
Can I change my prepayment meter for a regular one?
If you have a smart prepay meter, you can ask your energy provider to change it to a standard credit meter remotely – as long as you meet certain conditions.
If you inherit a prepayment meter through a house move, contact your supplier to tell them you’re the new owner. You should then be able to change your meter if you want.
If you’ve had problems with bills in the past but are now back on your feet, you might be able to switch from a prepaid meter to a regular meter. This will probably involve a credit check though, and may come on the condition that your account is 100% debt-free.
What happens if I run out of credit?
Most prepayment meters offer emergency credit or ‘friendly credit’ that prevents you being cut off during certain times or days of the week when the shops are closed and you’re unable to top up.
If you’re struggling to pay for gas and electricity, contact your supplier for support. Suppliers must work with you to agree on a payment plan you can afford. You can ask for:
A review of your payments and debt repayments
Payment breaks or reductions
More time to pay
Access to hardship funds
Priority Service registration – a free support service if you are in a vulnerable situation.
How do I get a new card or key for my prepayment meter?
If you’ve lost your gas or electric meter key or card, or it’s been damaged or stopped working, contact your energy supplier to find out what to do. They’ll probably give you the option to pick up a new meter key or card from a Payzone or PayPoint outlet or a post office.
Alternatively, your supplier can post a new gas or electric key or card to you, but it can take three to five working days.
Don’t worry about going without energy, as you should be able to top up without a card using your top-up card premise number (a numbered code). Your supplier will give you this when you contact them.
For more than 20 years, Dan has been introducing, developing and managing product propositions across a variety of industries, including energy, insurance and banking, all to get the right outcome for customers.
Rebecca Goodman is a freelance financial journalist who specialises in insurance, personal finance and consumer affairs.
Rebecca regularly writes for national newspapers on a wide range of financial topics. She covers everything from money-saving tips and holiday advice to investigations into how energy efficient appliances can cut the cost of household bills and the impact donating money can have on those in need.
Along with features in national papers, Rebecca also writes news stories for websites including Yourmoney.com and The Money Edit.
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