Prepaid vs. Postpaid Energy: How to Know Which is Right for You

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Nobody wants to spend more on household bills than necessary. But you can’t exactly cut out the essentials, like electricity, altogether! If you’re exploring ways to save, you might have come across the concept of prepaid energy plans.

With a prepaid payment model, you put money into an account, and your electricity bill is paid from that account using those funds. When the balance is running low, you simply add more money to the account. But is getting a prepaid plan versus a traditional plan worth it? Does it actually save you cash—and what happens if your account balance gets too low?

There’s a lot to figure out, but luckily, we’re here to guide you in making the choice that is right for you.

Prepaid vs. Postpaid Energy

For many households, prepaid energy can be a smart alternative to postpaid, or traditional, energy. 

What is Prepaid Energy?

Prepaid energy is a type of electricity plan in which homeowners can pay as they go for their power. The customer sets up an account with the relevant energy provider and funds that account with their own money. Money is then deducted from the pre-funded account in line with the customer’s energy usage. As the balance in the prepaid account decreases, the customer can add more funds.

What is Postpaid Energy?

In a postpaid plan, also known as a traditional plan, there isn’t any advance payment. The electric company simply calculates the household’s energy usage and then sends a bill to be paid at regular intervals, usually monthly.

Why would a household opt for a prepaid plan over a postpaid plan? Some people find it easier to monitor their energy usage using prepaid plans—and even report saving money using prepaid plans. That said, there are drawbacks to prepaid plans versus postpaid plans. Learn more about the pros and cons here.

How does Prepaid Electricity Work?

Prepaid energy plans have gained popularity thanks to the flexibility they offer. While they aren’t available in every state, those with deregulated energy markets—like Texas—offer them.

To enroll in a prepaid energy plan in Texas, you need a local address and a smart meter in your home (if you don’t have a smart meter, the power company can install one). Homes with a smart meter can often be connected to the power grid and activated remotely on the same day.

You then deposit money into your account before you start using electricity. The money to pay for your power use is then deducted from that account. You can fund the account easily via online payments or on the provider’s website. It’s also possible to fund the account via phone or in person at a MoneyGram location.

Your home’s smart meter is read daily, and you’ll receive a notification via email or text message that tells you how much power you’re using. Your daily report will show how many kilowatt-hours (kWh) you’ve consumed, your remaining account balance, your savings for the day, and how many approximate days of power you have left given your current balance.

Learn more about how prepaid energy works.

Pros & Cons of Prepaid Energy

How to Know if a Prepaid Plan is Right for You

There isn’t one right solution for everyone—choosing a prepaid plan instead of a postpaid plan depends on your unique needs and situation. 

Ask yourself these questions to figure out if a prepaid power plan may be right for you:

• What’s my credit score? A low credit score can keep you from getting a traditional energy plan. Prepaid plans with Payless Power don’t require a credit check or deposit, and customers get instant approval regardless of credit score. Prepaid plans don’t directly contribute to building good credit, but some people may use a regular postpaid energy plan to help build their credit.
• Will I stay on top of my account management? With a prepaid plan, you need to keep an eye on the funds in your account. If you’re busy with everyday life, taking the time to reload your account may be a hassle you don’t want to deal with.
• Are monthly bills or usage-based payments better for me? Some consumers prefer to get a fixed monthly bill every month. Others like usage-based payments better. It’s just a matter of preference!
• Do I have plans to move any time soon? One major benefit of prepaid plans is their flexibility. You don’t need to get locked into any kind of long-term contract since you’re paying as you go. If you have plans to move, this is ideal.
• Is flexibility a consideration for me for other reasons? Even if you aren’t planning to move, you may appreciate the flexibility of a prepaid plan. For example, you may be shopping around for energy providers and trying to find the best one for you. While you figure that out, you don’t want to get tied to a lengthy contract, making prepaid a good choice.

Sign up for Prepaid Energy with Payless Power

If you’re looking for a prepaid energy provider in Texas, check out Payless Power. Our prepaid plans are fast and easy to set up and don’t require you to commit to a long-term contract. Plus, there’s no credit check or security deposit required.

Check the list of service areas, from Dallas to Houston and beyond, to see if you’re covered. Once you’re all set up, we’ll send you daily notifications via text or email about your energy usage so you can start saving money on power right away.

Visit our enrollment page to get started.

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