Prepaid plans work well for some energy customers, but they aren’t for everybody. Here’s a look at who can benefit from pay-as-you-go electricity — and who may want to think twice.
Who should get prepaid electricity?
Prepaid electricity is a good option for customers with low credit scores. However, prepaid plans can also be advantageous for other reasons. Here are a few scenarios where a prepaid light company might be the best choice:
- Families with limited credit or utility history
- Anyone trying to sign up for electric service without additional upfront costs
- Families or individuals who will be moving soon or move frequently
Who should not get prepaid electricity?
Prepaid plans are great if you don’t want to pay a deposit or you don’t have great credit. They allow you to know what you owe in advance and manage usage as the month progresses. But there are also some downsides, and you may not want to prepay for energy if:
- You don’t want to pay in advance. If you’re already worried about paying a deposit, this might not be a good choice.
- You don’t want to tie up money in a minimum account balance. If you frequently find yourself needing more electricity than you paid for, this could become a problem.
- You want to keep your rate as low as possible. While prepaid electricity plans don’t include early termination fees to keep you from switching before a contract ends, rates often are higher than traditional plans.
Despite these drawbacks, prepaid electricity plans are beneficial to many because they don’t tie up funds in a huge deposit that doesn’t go toward energy costs. Customers with a tight budget can manage their energy usage to keep costs down.
