Pre-payment cards - are they more expensive?

OllieInLondon

Hi,
A friend of mine has been told by his supplier that he is going to be moved to a pre-payment card system for gas and electricity, due to being in arrears (to the tune of about £300 I believe).

It was my understanding that such cards are more expensive than paying "normally" (even ignoring any discount that you might get for paying by direct debit).

However, he says that he spoke to someone at the company (I can't remember which company it is) and was told to ignore anybody who told him that pre-payment cards were more expensive.

It would seem that he will have to have the card system for now, because he says that he can't clear the arrears, but if he has been wrongly advised I would like to let him know so that he can focus on getting back to paying normally ASAP. As it stands he'll probably stay with the card system, because he trusts what the company told him, but obviously every penny counts for him, so I'd hate to think that he is overpaying and maybe unnecessarily getting further into debt.

I wonder if anybody here could advise please.

macman

PPM's cost the same as the supplier's Standard tariff. So typically they'll cost no more than 4-6% more than the best online discount tariff.
If your friend can 't manage the debt, or has defaulted on an agreed repayment schedule, then the PPM's will eventually be imposed anyway. Better to have them fitted voluntarily and save the warrant fees.

Horseunderwater

I too had a debt to repay on my meter in 05 as I lost my job 2 days before Christmas 04. I had not gone back to credit meter. Asked for 2 PPM's to be fitted for both gas and electric and I agreed to pay back £4.99/ week off the debt as well as paying for my usage up front. It did not take too long to clear. And I knew what my usage was. I have since kept them in despite clearing the debt in 06. It is now standard tariff for my PPM's on both. I can work out approx how much I will use each week and budget accordingly. I did not want to get into the DD situation where the utility company just upped the DD when they felt like it. I wanted control. And that's what I have.

OllieInLondon

macman wrote: »

PPM's cost the same as the supplier's Standard tariff. So typically they'll cost no more than 4-6% more than the best online discount tariff.
If your friend can 't manage the debt, or has defaulted on an agreed repayment schedule, then the PPM's will eventually be imposed anyway. Better to have them fitted voluntarily and save the warrant fees.

Thanks. I don't know whether he has defaulted on an agreed schedule, but he does seem to think that he has no choice but to be switched for now.

Horseunderwater wrote: »

I too had a debt to repay on my meter in 05 as I lost my job 2 days before Christmas 04. I had not gone back to credit meter. Asked for 2 PPM's to be fitted for both gas and electric and I agreed to pay back £4.99/ week off the debt as well as paying for my usage up front. It did not take too long to clear. And I knew what my usage was. I have since kept them in despite clearing the debt in 06. It is now standard tariff for my PPM's on both. I can work out approx how much I will use each week and budget accordingly. I did not want to get into the DD situation where the utility company just upped the DD when they felt like it. I wanted control. And that's what I have.

Thanks, my friend is thinking the same at the moment. He thinks that he will be more aware of what he is spending and also be more careful.

I do wonder though. Presumably, regardless of how he pays for his bills, he will try to use the minimum amount of gas an electric that he can get away with.

If he is using the minimum he needs, then he is still paying more on the PPM, even if he feels more in control, perhaps quite a lot more over the long run. After all, if the company puts up prices, it'll put them up for PPMs as well as normal payments.

He'd be better off if he could just put money aside each week, even if he doesn't know exactly how much is needed.

All I will do though, is just let him know that it is actually more expensive (and presumably would cost him something is he ever wanted to move back to a normal meter).

undaunted

These days they should be no more expensive than a standard tarrif but they are both likely to be more expensive than paying by direct debit.

Some suppliers will become awkward about removing PPM at all later and others will charge for it, require a security deposit to do it etc

If your friend is on benefits he does have another option - Fuel Direct http://cfe.custhelp.com/app/answers/detail/a_id/5488/~/information-about-fuel-direct

I do wish some posters would stick to helpful and informative posts and facts rather than implied assumptions and judgements!

macman

OllieInLondon wrote: »

Thanks. I don't know whether he has defaulted on an agreed schedule, but he does seem to think that he has no choice but to be switched for now.



Thanks, my friend is thinking the same at the moment. He thinks that he will be more aware of what he is spending and also be more careful.

I do wonder though. Presumably, regardless of how he pays for his bills, he will try to use the minimum amount of gas an electric that he can get away with.

If he is using the minimum he needs, then he is still paying more on the PPM, even if he feels more in control, perhaps quite a lot more over the long run. After all, if the company puts up prices, it'll put them up for PPMs as well as normal payments.

He'd be better off if he could just put money aside each week, even if he doesn't know exactly how much is needed.

All I will do though, is just let him know that it is actually more expensive (and presumably would cost him something is he ever wanted to move back to a normal meter).

Yes, he would, but the fact that he's failed to pay his quarterly bills or his monthly DD's and has built debt, leading to a supplier demand for PPM's, indicates that he is not able to do this.
PPM's take the debt management out of his hands.

Ich_2

It will appear as if he is paying more as the debt will still need to be paid via the meter. Even if he uses no gas or electricity in a week the debt re-payment will still go onto the meter and need cleared before gas or electricity is available

chris1973

So typically they'll cost no more than 4-6% more than the best online discount tariff.

Most of the energy companies excuse this difference by way of having to fund the Paypoint terminals and infrastructure. It seems to me that a lot of this expense could be reduced by introducing PC / USB based internet top up terminals, or even text-pay methods. The majority of PAYG mobile phone operators have a means to top up the phone online or by text, why are pre-payment top up's falling behind in technology?.

Unfortunately, as prices continue to rise, then I can see Prepayment meters becoming more and more popular.

British Gas already has a USB based terminal where you can top up your meter key over the internet and pay by debit or credit card without leaving the house. Its a shame other Energy Companies aren't following their lead.

Of course, the 4 - 6% difference between Standard and Direct Debit Tariffs doesn't take into consideration the cost of petrol or parking when you forget to top up and have to make a dedicated trip to top it up because you forgot the key on the way to work. Something which happens a few times to people who are not familiar with Prepayment meters and aren't yet into the top up shuffle

SwanJon

OllieInLondon wrote: »

Hi,
A friend of mine has been told by his supplier that he is going to be moved to a pre-payment card system for gas and electricity, due to being in arrears (to the tune of about £300 I believe)

As above, the PPMs will allow him to clear his balance without getting further in debt.
It might also be worth looking at http://charisgrants.com if he's with one of those suppliers.

chris1973 wrote: »

Most of the energy companies excuse this difference by way of having to fund the Paypoint terminals and infrastructure. It seems to me that a lot of this expense could be reduced by introducing PC / USB based internet top up terminals, or even text-pay methods. The majority of PAYG mobile phone operators have a means to top up the phone online or by text, why are pre-payment top up's falling behind in technology?.

Mobile phones have the advantage of being linked into a network that manages the credit. With energy meters there is a break between the shop & the meter which the card/key fills. The USB bits help with this, but they card/key still fills the gap between internet & meter. Smart meters don't have this gap and can be topped up online/by text.

chris1973

With energy meters there is a break between the shop & the meter which the card/key fills.

So what you are saying is that being effectively limited to standard tariff prices is done to pay for the key and its original programming.

If that is the case, then since the online comparison sites suggest that I pay £194 a year more for being an a prepay tariff, compared to the best credit meter tariff with DD payments, thats a hell of a lot of money to pay for a piece of plastic containing a microprocessor and a few flash memory chips - which is probably manufactured in bulk in China, especially if you happen to stay with the same supplier and use the same key for more than 12 months.

If this really is the case then perhaps the utility companies could arrange for the customer to 'buy' their prepayment key for say £50, in return for the same tariff's that direct debit customers get. It would also ensure some loyalty on the basis that the customer was more likely to stay with that particular energy company for longer, and it would mean that prepayment customers (who are after all some in some case of the most vulnerable in society) get exactly the same tariff options as everybody else, including fixed ones.

At work. we make an entire engine management module for a commercial vehicle manufacturer, for not much more than £50 works cost. So you are not going to tell me that providing the key costs the Energy company anything like the £194 I 'overpay' every year in the difference between prepayment and the best direct debit tariff.

Like I said in another thread. In any other industry, paying cash up front over the counter for goods or services in advance, would generally get you a discount, however in the Energy Industry, doing effectively the same thing actually costs you more, almost £200 a year more in fact.

I wonder what would happen if the National Lottery started charging customers an extra 25p for using shop based terminals to buy their ticket(s) but kept it at the same price for those buying their tickets online?.

amiehall

Your supplier has to pay the shop for processing your payments. Paypoint also take a cut. The actual meter is expensive too. Also you're not paying anymore than anyone on quarterly payment. If you want to pay the same on a prepay meter, switch to ebico.