Advantages and Disadvantages of Prepaid Electricity

There are a lot of advantages and disadvantages to using prepaid electricity in your home. Prepaid electricity is a useful way for you to manage your electric costs. This type of electricity doesn’t require a deposit or a credit check, but you need to pay for your electricity in advance.

Advantages of Prepaid Electricity

Some of the advantages you’ll appreciate about buying this type of electricity, include:

  • You can easily avoid accumulating a debt for your electric usage, since you’re in control of how much you use and you buy it before you use it.
  • You’ll always know what your balance is, because you will receive electronic communications from your retail electric provider letting you know how much balance you have left.
  • There’s never any bills. If you do owe any money from an old, outstanding bill, you can get prepaid electricity to restore your electric service without a credit check. These payments are made upfront and most electricity companies accept payments via phone and online through their website’s portal.

Advantages and Disadvantages of Prepaid Electricity

Disadvantages of Prepaid Electricity

Understanding the various disadvantages of prepaid electricity is also important. They include:

  • Prepaid electricity plans are usually more expensive than any other type of fixed or variable plan. As such, you may not be able to access the most inexpensive rates.
  • You must maintain your account balance at or above the disconnection balance, otherwise your service may get disconnected.
  • When your prepaid electricity account runs out of credit, your service gets turned off.
  • Service gets disconnected with very little notice after your account runs out of balance. Prepaid electricity service may be disconnected in as little as one day after you receive a low balance notification.
  • You’ll have to top-up more often when the weather is hotter outside.
  • If you go on a business trip or take a vacation, you have to remember to make sure your account has enough credit so you don’t lose electricity while you’re away, which could cause a lot of problems (e.g. coming home to spoiled food since your refrigerator lost electricity).

Now that you know about both, the advantages and disadvantages of prepaid electricity, you should be able to decide whether this option is right for you. The answer to this will be different for every household. Take your time to read through the facts about prepaid electricity to ensure you make the best decision for your situation.

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