Should I Switch To An Advanced Payment Energy Tariff?
What is an Advanced Payment Energy Tariff?
An advanced payment energy tariff is all about how and when you pay for the energy you use. There are a number of different ways to pay your energy bills. The options are generally as follows:
- Paying by direct debit.
- Prepayment tariffs.
- Advanced payments.
It is important to note that an advanced payment tariff is not the same as a prepayment tariff. A prepayment tariff is required for those with a prepayment meter in their homes.
Advanced payment is an energy deal that involves payment being taken by direct debit before you use the energy. This type of payment is often required by smaller energy providers. They ask for the money ahead of use largely because they are more vulnerable to changes in cash flow.
Suppliers give a range of different reasons for requiring advance payment. Some refer to it as a ‘deposit’, while others tell customers that it is because they have to buy the energy you use in advance.
What Are the Advantages of Advanced Payment Tariffs?
Since these deals are often offered by smaller, less established energy companies, advanced payment tariffs can be some of the cheapest available on the market. Their low cost can make these deals rather alluring when you are shopping around to find the best deals.
For the most part, the advantages of these tariff types are for the supplier. They are better able to manage their cash flow, and will benefit from having the money to purchase the energy you use up front. While benefiting the supplier may not be top of your agenda when it comes to finding the right energy deal, it may still sometimes be something to consider. Small companies may have better green credentials, or more ethical or sustainable practices than larger energy suppliers, which may be something that you will want to take into account.
What Are the Down Sides to Advanced Payment Tariffs?
As mentioned above, the low cost of advanced payment tariffs can sometimes make them seem like a very good option. However, there are certain down sides to be aware of when considering them.
First of all, it is very important to check around to make sure that the deal on offer really is the best and cheapest you can find. While cheap, there is no guarantee that advanced payment tariffs will really save you the most money. Compare with Money Pug before you commit to making the switch.
Another important thing to think about is when the advanced payment will be taken. It will be taken before your supply start date. This first payment will likely be for a month worth of energy. The second payment will be due as normal, so it is important to realise that you will, essentially, be paying double that month. (In much the same way that you would pay a deposit and a first month’s rent when moving into a new tenancy agreement.)
You should also bear in mind that if you owe any money to your current supplier, you will have to pay that off too when you switch. So make sure, if you decide to switch to an advanced payment tariff, that you really can take than initial financial hit at the beginning of your new contract.
Your advanced payment should be refundable should you decide to leave the supplier at a later date. However, it is important to always check the terms and conditions. Make sure you understand exactly how you are to get this payment back, and when it will happen.
What Other Payment Options Should I Consider?
If you have a prepayment meter, you will have to go with a prepayment tariff. You will need to load up the top-up card with credit at a local Post Office, PayPoint or PayZone.
The most popular way to pay for your electricity, gas or both is by monthly direct debit. When you sign up for a direct debit agreement, all you are doing is basically authorising your energy supplier to automatically collect the money owed from your bank account. You can also pay by cheque or cash in some instances, but paying by direct debit will be slightly cheaper.
In order to save money when paying by direct debit, you can also:
- Switch to paperless, online accounting. (Checking your bills online rather than receiving them through the post).
- Switch to a fixed rate tariff rather than staying on a standard tariff.
- Opt for a dual fuel tariff. (Getting gas and electricity from the same supplier rather than dealing with two different firms.)
Doing all of these three things, and paying for the energy you use by direct debit, is often the best way to get the best deal and save money on your energy bills. It may work out more cost effective than even the best advanced payment tariffs around.
It may seem confusing, but finding the best energy deal is easier when you compare and switch with Money Pug. So, whether or not you eventually decide to go for an advanced payment tariff from an energy supplier, compare all of your options before you finally make your choice and you are always sure to come out on top.
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