Pay as you go energy:
how it works and how to pay less
Around four million UK households use a prepayment meter. Here is everything you need to know about PAYG energy in 2026, from topping up to switching to a cheaper deal.
Pay as you go energy uses a prepayment meter that requires you to top up credit before using gas or electricity. Your rates are covered by the Ofgem price cap. Since February 2024, prepayment standing charges were discounted to match direct debit rates more closely. You can switch to a cheaper prepayment tariff or to a credit meter in most cases.
How pay as you go energy works
Top up your meter
Add credit at a PayPoint, Payzone, or Post Office using your key, card, or smart meter token. Most suppliers also offer app and online top-ups for smart meters.
Credit is deducted as you use energy
Your meter draws down credit as you use gas and electricity. If you have debt on the meter, a portion of each top-up goes towards repaying it first.
Emergency credit keeps you on
If your credit runs low, most suppliers provide £5 to £10 of emergency credit. Friendly hours protection means you cannot be disconnected at night, weekends, or bank holidays.
Smart prepayment meters (SMETS2 in prepayment mode) are now the most common and convenient option. They allow app top-ups, real-time balance monitoring, and instant emergency credit. Legacy key and card meters still work but require physical top-up visits and have slower fault recovery.
Are prepayment meters more expensive?
Historically, prepayment customers paid more than direct debit customers, sometimes called the prepay penalty. This changed in February 2024 when Ofgem introduced standing charge discounts for prepayment users to bring their costs in line with direct debit rates. Prepayment unit rates are now subject to the same price cap as standard variable tariffs.
However, prepayment customers on default tariffs still typically pay more than households on competitive fixed deals. The price cap is the maximum a supplier can charge on a default tariff. Fixed deals negotiated below the cap can be cheaper. If you are on a prepayment meter and have not compared tariffs recently, it is worth doing so. You can switch prepayment tariff in 5 working days.
Standing charges now equalised
Since February 2024, Ofgem requires prepayment standing charges to be no higher than direct debit rates. The historic prepay penalty on standing charges has been removed for most customers.
Fixed deals can still be cheaper
The price cap governs default tariffs. Competitive fixed deals can sit below the cap. Comparing tariffs is still the best way to reduce costs, even on a prepayment meter. See our tariff comparison.
How to switch prepayment meter or supplier
You have two options if you want to pay less: switch to a cheaper prepayment tariff with a different supplier, or switch from a prepayment meter to a credit meter.
Switching prepayment tariffs works the same as for standard meters under Faster Switching rules. The process takes 5 working days. If you have debt on your meter, the Debt Assignment Protocol allows you to carry up to £500 of debt per fuel to your new supplier, so debt does not have to prevent you from switching to a better deal.
Switching from a prepayment meter to a credit meter requires contacting your current supplier. You may need to pass a credit check and your account must typically be debt-free. Some suppliers do this for free. Renters need their landlord's permission. If your supplier charges for the switch, you can instead switch to a cheaper prepayment tariff with a supplier who will upgrade your meter for free.
On a prepayment meter? Compare tariffs
Switching prepay tariff takes 5 working days. See what cheaper deals are available for your household.
Questions people ask
Pay as you go energy works like a PAYG mobile phone. You top up credit before using gas or electricity, using a prepayment meter. Around four million UK households currently use one. Smart meters in prepayment mode are the most convenient option in 2026.
Not necessarily in 2026. Ofgem equalised standing charges for prepayment and direct debit customers in February 2024. Unit rates are covered by the same price cap. However, prepayment customers on default tariffs can still pay more than those on competitive fixed deals, so comparing is worthwhile.
Top up at PayPoint, Payzone, or the Post Office using your key, card, or smart meter token. Most major suppliers also offer app and online top-ups for smart meters. Emergency credit of £5 to £10 is usually available when your balance runs low.
Yes. Switching takes 5 working days under Faster Switching rules. The Debt Assignment Protocol lets you carry up to £500 of debt per fuel to a new supplier, so debt does not have to stop you switching to a better deal.
Yes, in most cases. Contact your supplier. You may need to pass a credit check and be debt-free. Some suppliers do this for free. Renters need landlord permission. If your supplier charges for it, consider switching to a new supplier who will upgrade your meter at no cost.
Related energy guides
On a prepayment meter and want to pay less?
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