The Advantages and Disadvantages of Prepaid Electricity

Prepaid electricity is a payment model where the customers pay for the electricity before they use it. The United States, United Kingdom, South Africa, and New Zealand. There are many benefits and a few disadvantages to using this type of payment module.

People with Bad Credit

This type of electricity is sometimes referred to as no deposit electricity because there is no deposit needed to start the service. The customer pays for the electricity that they are using, and it is turned on. The electric companies do not require a credit or background check for this service. People who are struggling financially may prefer this service because they do not need to worry about a high upfront cost. They also do not need to worry about being turned down or paying more because of a bad credit score.

Makes Customers More Conscious Of Their Energy Uses

A study by the Distributed Energy Financial Group looked at 1,400 customers that were enrolled in prepay electric and found they cut their electric usage between 5.5 percent and 14 percent. Many prepaid users have accesses to data that shows when there are energy spikes. The users are also more aware of how much electricity they are using per day. The customers can take this into consideration when they are deciding what appliances to get or when to leave certain things running.

Saves from Unexpected Bills

The customers do not have to worry about what their electricity bill will look like at the end of the month because the system is prepaid. Since customers can monitor how much electricity that they use, it is easier for them to set aside an electricity budget every month. The customers also do not have to worry about overestimates on their meter.

Good for People Who Travel

If the customer is only going to be in a place for a certain time, then prepaid might be a better option. The customer only has to pay for electricity when it is needed. Business people, college students, and people who own hunting cabins are some people who might benefit from this model.

The Disadvantages of Using Prepaid

While there are many advantages to using prepaid electricity, there are also some disadvantages. One of the biggest disadvantages is when you run out of money on your account the power goes out. Prepaid meters can be disconnected remotely. The electric company does not have to send a warning letter before they turn the power off. Some companies do offer some protection to its customers. An electrical company in Arizona, allows customers to set up an emergency fund that can be accessed when their funds are low. They also do not shut off the power between 6 P.M to 6 A.M, so the customers do not have to worry about waking up in the dark.

Prepaid Electricity can be a great for many people. The customers can monitor and budget their electricity efficiently. The customers also do not have to worry about background checks or other unexpected charges. If they watch their funds, the advantages outweigh the disadvantages.

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