Should you sign up for prepay power?
If you struggle to pay your monthly power bills or just like the idea of doing away with them, you might be considering signing up for prepay power.
How does prepay power work?
Much like when you have a prepay phone, with prepay power you top up your account to keep it going. To top up, you make a payment through a website, app or text message. With Globug, you can also top up at a convenience store.
The main prepay providers in New Zealand are Globug, Wise and Contact Energy.
Why prepay power might sound like a good idea
Sometimes prepay might be your only option. If you’ve had your power disconnected and have a poor credit rating, it can be hard to find a new power company that will take you on. Prepay power can become your only option.
Prepay power is also marketed as a way to avoid bill shock, as there’s no monthly bill, and a way to see how you’re using power and what it’s costing you.
If you’re thinking about signing up for prepay, there are some big downsides to be aware of.
The downsides of prepay power
When you don’t top up, you don’t have power
When you’re on a traditional power plan, you’ll get a few reminders to pay your bill before you’re eventually cut off. With prepay, if your credit gets below a certain amount and you can’t afford to top up, the power will be disconnected.
Going without power can start to feel normal – with risks for your household
Once you’ve realised you can avoid paying for power by going without it for a while, it can start to feel normal to do this regularly to get through hard times. This can have knock on effects, such as the food in your freezer thawing out and becoming unsafe to eat, or your family getting sick because they’re not living in a healthy warm home in winter.
Prepay power could cost more than power on a plan
While power prices fluctuate, when we’ve looked at the cost of prepay power in the past we’ve found it can be more expensive than the cheapest non-prepay options.
Before you make the switch, it’s a good idea to check the kWh rate you’ll be paying and compare it to what other plans cost.
There are usually fees involved
There’s also usually a fee each time you top up. If you can only top up a small amount each time, these fees will soon add up.
You can’t get cheaper power during off-peak times
Some power companies now offer cheaper power during off-peak times, such as in the evening or on the weekend. This can help people save on power by changing when they do things – like running the washing machine and dishwasher at night. This isn’t an option if you’re on prepay.
How much could you save?
With the market always changing, it pays to check often for the best deals. We compare thousands of electricity and gas plans for free. Do a quick check to see how much you could be saving.
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