For many people with poor credit or no credit, getting a basic need like electricity can be incredibly expensive and seemingly impossible.
Electricity providers perform credit checks for traditional postpaid electricity plans before agreeing to connect power to your home. If your credit rating is low or if you’ve just struck out on your own and don’t have credit established, your provider may require a large deposit before agreeing to do business with you.
A prepaid electricity plan with an established electricity supplier can be a tremendous help in this situation. With prepaid plans, your provider won’t perform credit checks, they don’t require a deposit, and everyone is guaranteed to be accepted. Based on the same concept as prepaid credit cards, this model is very popular where it is available.
How Prepaid Electricity Works
With a prepaid electricity plan, you fund your account with money that pays for the electricity that you plan to use before you use it. This is different from a traditional postpaid electricity plan where you receive a bill at the end of the month and pay for the electricity after you use it.
The process for signing up for a prepaid electricity plan is simple. There is not a high connection fee or any delay for installation. Same day service is even available for established connections.
Here’s how the prepaid process works:
- Shop for a prepaid electricity plan. Use an electricity plan shopping tool like ElectricityPlans.com to compare plans to find the best one for you.
- Select a prepaid plan and sign up with the electricity provider offering the plan. You can sign up online or call, and create your account without leaving home.
- Fund your account. You’ll need to establish a balance before the electricity provider establishes service. This payment is a connection balance not a deposit. Electricity providers may require between $30 and $75 to establish service.
- Use on-line tools to track your energy usage. Your electricity provider will provide you with current information regarding the amount of energy you use and your remaining balance.
- Watch for email or text message alerts when your account is running low. You’ll usually get a message when you’ve got an estimated 1 to 7 days left before your account balance is expected to fall below a disconnection level.
- Add more money to your account to keep the power on. Your electricity provider will offer you several ways to add money to your account including on-line, calling customer service, or going to an authorized payment center.
Is a Prepaid Electricity Plan Right for Me?
Prepaid electricity plans are a smart option if you can’t afford a large deposit or if you’re trying to build credit. Since there is no credit check, you don’t have to worry about having a fragile credit score impacted by a credit agency checking up on you. The amount required to fund a prepaid electricity account is reasonable as well. No credit check and minimal up front funding makes getting power a snap without the need to save or borrow money for a deposit.
Most prepaid electricity plans are short-term, either month-to-month or 3 months in length. The price per kWh for prepaid plans is slightly higher than their traditional postpaid electricity plan counterpart. With a month-to-month plan, the price you pay for the electricity you use will vary each month. There is no limit as to how much your cost of electricity will increase or decrease.
You do not receive a bill at the end of the month with a prepaid electricity plan. Instead, you purchase the amount of electricity you need up front. With varying prices per kWh and electricity usage each month, it is very important that you monitor the balance in your prepaid account closely to insure against getting your power turned off. Your provider will send you alerts either by text or email if your account balance is in danger of dropping too low.
Perks of Prepaid Electricity
Some Texas electricity providers offer their prepaid electricity customers the ability to transition to a traditional fixed price postpaid electricity account without a deposit after a certain amount of time of maintaining your prepaid account. This is a fantastic way to build credit.
The on-line tools for tracking energy usage with a prepaid electricity plan can help you be smarter about how you consume energy. You’ll become more aware of when and where you use electricity and you can adjust your habits and save money.
With prepaid electricity, there is no fear of being shocked by your electricity bill at the end of the month. You can fund your account when and where it’s convenient for you. No more worries about having your power turned off unexpectedly because your payment didn’t arrive on time or you can’t pay your bill in full.
Good credit is important to all of us and no one wants to have to make a large deposit for something as important as electricity. Fortunately, options like prepaid electricity exist that make obtaining electric service more affordable, convenient, and accessible to everyone.