Can Prepaid Electricity Shrink Your Bills?

So what’s the deal with prepaid electricity? Let’s be honest- far too often the term "prepaid" has a negative connotation. Why is that?

Prepaid options are often ideal for those who do not have good enough credit to sign up for a plan that allows them to pay afterwards for something they have already consumed. This association of lacking good credit necessitating prepaid options is what tends to stick in people’s minds. However, today we're going to look at this from another angle: do you respect people who are good at making and sticking to a budget? Your answer to this question is probably yes, if you value the ability to save money and keep out of debt. With the installation of smart meters in more and more homes, it is possible for utility companies to remotely monitor usage in your home and let you know when your prepaid balance is running low. So far, it is less widespread to be able to personally monitor your usage trend data online, and not everyone utilizes this feature even if their utility company offers it. (To learn a bit more about this and to see if your utility company offers the Green Button, go to the Green Button website.) Setting a reasonable energy budget each month and signing up for a prepaid plan will make you more aware of your usage and what you spend than the grand majority of consumers. People tend to save more money when they pay it manually or in cash, and this is especially true for prepaid plans where you have to pay money up front.

Think about this example: it’s springtime, and at the beginning of the month, you decide to put exactly the amount you needed to get through last month onto your account. Around the 15th of the month, you get an alert saying your account is running low and to add more funds to avoid disconnect. You think to yourself, “How am I using so much more than last month? I guess it is a little warmer out. I should probably start turning the air up a bit when I leave for work, and maybe also close the curtains and double check to make sure I don’t leave lights on.”

The best thing about that scenario is that you are able to proactively reduce your usage to cut your costs, rather than being blissfully unaware of your exorbitant energy usage until the end of the month when you’ve already blown your budget without even knowing what happened. So go check out some prepaid plans, heighten your awareness, and exercise your newfound control! If you keep your old utility bills, it may even be fun to go back and compare your usage during corresponding months when you were on a non-prepaid plan to see what kind of a difference it’s made.