What is Prepaid Electricity?

is prepaid electricity better

Prepaid Electricity: What is it?

Pay-as-you-go (prepaid) electricity is an electric plan where you are able to pay for electricity before you use it – so that you can control how much is it going to cost you each month. Think of a prepaid phone- you top up, you use your credit to make calls and send texts and when your credit runs low, you put additional money in.

When signing up with a prepaid electric company, you don’t have to pay a deposit, sign a contract, or undergo a credit check. You simply sign up online, choose how much money to put in and you are good to go.

Who is Eligible for Pre-paid Electricity?

Today there are 18 U.S. states with deregulated electricity where the customer has the freedom of choice when it comes to electricity. Suppliers in all these states offer pre-paid electricity plans as part of their portfolios.

Customers who choose prepaid also avoid deposits, contracts, and credit checks – making pay as you go more accessible than other options if you don’t have the funds for a hefty deposit readily available.

The only requirement of pre-paid plans is that you keep a positive balance at all times – if you don’t, your service might get disconnected. Topping up is quite easy – you can do it online.

Advantages of Pre-paid Electricity

Enjoy Cost Certainty

Pre-paid payments give you a level of cost security because you know exactly how much are you going to spend on your monthly energy bill. The ability to foresee your electricity spending can help you manage the remainder of your budget without worrying that you will fall short at the end of the month.

Feel the Incentive to Conserve

It sounds crazy, but you will subconsciously start reducing your power usage as well. When you’ve topped up a certain amount of electricity, you will be more conscious not to burn through it too quickly – otherwise, you might find yourself with a disconnected service when your balance runs too low. Practicing energy conservation (within reason!) is a noble task with multiple benefits both for the planet and for the customer.

Real-Time Consumption Monitoring

Prepaid plans are usually connected to a smart meter, meaning that you will receive notifications about your energy consumptions on a regular basis, allowing you to make more targeted decisions. Thanks to this data, you can identify times and situations when you’re using more or less energy, bringing down your overall prepaid electric bill.


Pre-paid plans are a great way to avoid getting locked in a long-term contract with your utility company. Whether you are thinking about moving houses or you just want to shop around for a better energy rate, having a power plan that you can cancel without fees or the loss of a deposit is a relief.

Is Prepaid Electricity Service a Cheaper Option?

When deciding between plans, the most critical factor is probably which option will save you the most money.  Is prepaid electricity cheaper? It might be. However, you should consider multiple perspectives.

The energy rate per kWh on a pre-paid plan may or may not exceed the rate that you would pay on a postpaid fixed plan. The amount of savings will depend on your individual habits and behaviors. A pre-paid plan provides both an incentive and the tools you need to reduce your consumption and increase your home’s efficiency.

You might find that your reduced usage will balance out the slightly higher rate, so your electricity bill will go down overall. In addition, in the case that you decide to move houses, you will avoid paying an early termination fee, which can be hundreds of dollars for traditional postpaid plans.

Other Advantages of Prepaid Plan

Of course, there are other advantages for customers thinking about signing up for a pre-paid service.

Same Day Connection

With pre-paid plans, customers do not have to pay high connection or installation fees and can often have electricity connected faster than with a traditional fixed-rate plan. That’s very convenient for both households and small businesses as you won’t experience any disruption to your electricity. Cutoff periods run late – you can sign up at the end of your workday and still get electricity service the same day!

No Deposits

Because you are paying for the energy in advance (by topping up), prepaid energy plans don’t require you to pay a deposit upfront. Pay as you go plan can be a lifesaver for cash-strapped families that can use the money for more important items. Although a pre-paid electricity plan requires you to pay a small amount (usually $40), this amount actually goes towards your bill.

No Termination Fee

Pre-paid plans also don’t carry early termination or cancellation fees. You simply continue topping up your customer account for as long as you need to and when you find a better energy rate, you can switch anytime.

No Contracts

How convenient would it be to move houses, without worrying about canceling utility contracts and paying high outstanding bills? With pre-paid energy, you can! Since you make the payment for electricity upfront, the supplier doesn’t need you to sign a contract and commit yourself for a period of time.

No Credit Checks

These plans can be a great relief to people with a poor credit score, who otherwise would not get access to a good electricity plan, without paying a hefty deposit. A supplier offering a pre-paid plan will not run a credit check on you, so you don’t have to worry about not being eligible for service. You don’t even require to show your ID!

Promotions and Discounts with Prepaid Electricity Companies

The energy deregulation has brought an abundance of choice to customers in the U.S. Nowhere is it more true than in Texas, where many electricity providers compete for the attention of Texans with attractive electricity plans and added benefits. Just enter your zip code on our website to see prepaid electricity suppliers in your area.

Payless Power Prepaid Plans

One such provider is Payless Power, a family-owned business, serving customers in more than 400 deregulated communities in Texas since 2005. Customers can select from electricity plans, including:

SmarTricity $100 Cashback

With this generous plan, Payless Power offers customers credit in the amount of $10 each month for 10 months towards the account balance. This credit will be applied after 180 days of continuous service. A requirement for this plan is an initial balance of $40 and to maintain the account in the positive $35 or more at all times.

SmarTricity True Value

Texas customers can enjoy this pre-paid electricity plan with an electricity rate comparable to a traditional fixed plan (8 to 13 cents per kWh, based on your monthly usage). A requirement for this plan is an initial balance of $40 and to maintain the account in the positive $35 or more at all times.

One of the most popular types of plans, pre-paid electricity allows the customer to buy electricity upfront, month after month. The visibility into the remaining credit in the account allows the customer to keep track of the electricity usage and ultimately make much smarter decisions.


Are prepaid electricity services good?

Prepaid energy plans allow customers to pay for electric service on a pay as you go basis. They are considered a very flexible option as they don’t involve deposits, credit checks, or contracts. You as the customer simply charge up your account balance to the amount you wish to spend during the month and start using electricity.

How much does it cost to start a pay as you go plan?

Pre-paid electricity plans provide an opportunity for households to sign up for electricity with no deposits and no contract. The upfront costs of such plans are small and often require only an initial payment into the customer account, which is used towards the utility bill.

How do I sign up for a prepaid power plan?

You don’t have to spend hours researching on the internet to find the best-prepaid electricity plan. Simply enter your zip code on our website and we will compare all prepaid electricity Texas plans, available in your area.

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