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Advanced payment energy plans

Advanced payment energy plans

Advanced payment plans are some of the cheapest deals on the market — but are they worth it?

Run an energy comparison and beat the price cap

Make sure you're not overpaying for your energy and switch to a fixed deal now. Enter your postcode below to get started.

When it comes to paying for your gas and electricity, there are almost as many options as plans. How can you choose between Direct Debit, pay on receipt, prepayment tariffs or advanced payments?

It's worth noting that tariffs that require payment in advance are not the same as prepayment tariffs (which are required for those with a prepayment meter).

As is so often the case, it all depends on your personal circumstances. But there are a few rules you can follow to see if advanced payment plans are worth considering.

What is Advanced Payment energy tariff?

Advanced payment is when your direct debit payment payment is taken in advance of your energy use. It is most often required by smaller energy suppliers, who are more vulnerable to changes in cash flow.

Suppliers cite different reasons for why they require advance payment — some refer to it as a "deposit" while others simply say they require customers to pay in advance because they buy energy in advance.

No matter the reason for it, advance payment can be required of the cheapest energy tariffs on the market, because these deals as of late are offered by smaller, less-established energy suppliers.

advanced payment energy plans

What are the advantages of Advanced Payment energy deals?

The most obvious attraction of advance payment energy deals is simply their low cost; however, that's not necessarily guaranteed.

Otherwise, the advantage mostly falls to favour the supplier.

Run an energy comparison and beat the price cap

Make sure you're not overpaying for your energy and switch to a fixed deal now. Enter your postcode below to get started.

What should I look out for?

While the cheap overall cost advanced payment tariffs can seem attractive, there are a number of things to be aware of.

First, be sure to run an Ofgem-accredited energy comparison to determine if this advance payment energy tariff is truly the best option for your household. Be aware that a supplier may say "cheapest", but they may just be referring to the cheapest tariff they can currently offer.

Second, this advance payment will be taken before your supply start date, and is likely to be the amount of a month's worth of energy. Your second payment will be due as normal, so you'll essentially be paying double in that month (some suppliers liken it to moving and having to pay a deposit and first month's rent). Further, if you're in debt to your current supplier, you'll need to pay off that remainder when you switch away — so you'll need to ensure you're financially in a position to do this.

Finally, your advanced payment should be refundable should you decide to leave the supplier - but always check the terms and conditions to check how and when you'll get your advance payment back.

What other payment options are there?

The most popular alternative payment option is monthly Direct Debit. A Direct Debit is simply you authorising your energy company to automatically collect payments from your bank, but these plans will typically offer you a small discount.

You can pay Direct Debit quarterly or monthly, but you can also secure a further discount by paying and managing your bills online, otherwise known as ‘paperless billing’.

You can also make a sizeable saving by combining your gas and electricity on the same tariff. So-called ‘dual-fuel’ tariffs often offer you a substantial discount, especially if you also pay online and by Direct Debit.

Finally, if you think energy suppliers will put their prices up in future, fixed plans offer you the option of paying slightly more for your energy, but with the security that your payments will stay the same for the duration of the plan.

Most suppliers will still let you pay by cash or cheque, but you should be aware that you will pay more for this.

If you have a prepayment meter you will need to pre-load the top-up card with credit, which can be done at a local PayPoint of PayZone, or at the Post Office.

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