Prepayment meter vs direct debit – Which is better for your bills?

If you’re moving into a new place, then you’ll want to get the best possible energy setup that you can. And part of having a good setup is the method you use to pay for your electricity. Most homes and flats have their energy bills taken out via a direct debit each month to ensure that their electric and gas never runs out.

However, if you’re living in an apartment, you may be on a prepayment meter – or if you’re a landlord, you may have the choice between the two. So, are there any advantages to going for a prepayment meter as opposed to setting up a direct debit instead?

Prepayment meter vs direct debit

The truth is that although you may have heard there’s a big difference between the two, there’s actually not. Technically, there’s not going to be any difference in the amount of energy you use whether you go for a direct debit payment or instead select a prepayment meter.

However, it is true that all energy companies will allow you to pay via direct debit, whilst not all of them will allow you to use a prepayment meter. Therefore if you want to make sure that you have access to the cheapest energy bills on the market, then setting up a direct debit is the obvious choice, as you’ll just have more selection overall.

There are those that still prefer to opt for a prepaid meter and key option instead of signing up with their bank account, and there are a few reasons for this.

Prepayment meter

Essentially, a prepayment meter is just the equivalent of using a top up phone. You top your meter up with credit whenever you need to, and when it runs down the amount you’ve topped up, you’ll then go ahead and refill your meter with money. You’ll have a prepaid key that you can take to your local shop to top up with.

The benefit of this is that you’re always paying ahead of schedule, so you’re not going to go into debt by using energy you can’t afford. With a direct debit, you can use energy throughout the entire money, and you may not be able to afford it come the end of it. To be honest, there’s no real advantage for the tenant here, but it’s something that landlords will definitely want to think about.

prepaid-key

Advantages of going with prepayment meter

  • The main benefit of going with a prepayment meter over a direct debit is that you’ll never need to worry about going into debt. As mentioned above, this is mainly an advantage for a landlord who isn’t sure that their tenant can keep up with their bills.
  • If you still prefer to pay all of your bills with cash, then you can do this with a prepayment meter quite easily by taking it to your local shop and topping up. For the alternative, you must have a bank account.
  • One reason why a prepayment meter may be the better (or only) choice that some people have is that you don’t need to pass a credit check to use one. If you or your potential tenant has a bad credit score, then a prepayment meter may be the way to go.

Direct debit

Setting up a direct debit is easy, and many of us have them for other bills and debts that we need to pay off on a regular basis. And your energy bills are no different – you can set up a DD to go out of your account on a monthly basis based on the amount of electricity you use each month.

One of the downsides of smart meters is that you can’t always use them with a prepay meter, but you definite can with direct debit. Opting to go smart is one of the best decisions you can make if you like to keep on top of your bills and energy usage each month.

Advantages of opting for direct debit

  • As you’d probably expect, the ease of simply signing up via a direct debit and then almost forgetting about it is definitely the main reason why you’d go with a DD. You don’t need to do anything more than spend a few minutes setting the direct debit to go out of your account.
  • The ability to get cheaper tariffs with certain energy companies that won’t allow you to use a prepayment meter with their company is probably the biggest advantage of opting to go direct debit.
  • Unlike with a prepay meter where the electric will stop working if you haven’t topped things up properly, this won’t happen if you’re paying via a direct debit. This means that you or your tenants won’t have to worry about spending the bank holiday weekend in the dark.

Conclusion

All in all, there’s not a massive difference between these two different methods of paying your bills. Although having the money go out via a direct debit can definitely be the easiest and less complex of the two, it’s not always going to be the preferred choice. But the benefit of being able to go with any different energy supplier of your choice is definitely an advantage that probably outweighs all of the other factors.