Understanding payment methods

Managing household energy bills is an essential aspect of maintaining a budget and ensuring the smooth running of your home. When it comes to paying for your energy bills, there are various payment methods available. Each method has its own set of advantages and disadvantages. In this guide, we’ll explore the pros and cons of different payment methods to help you make an informed decision.


Direct Debit

Direct debit is a popular payment method where the energy provider automatically deducts a set amount from your account on a specific date every month. Most direct debits will spread your cost evenly over the year however some suppliers may offer direct debit tariffs where the debit is set to the amount you were billed that month.


  • If you’re on a fixed direct debit, you’ll have the same monthly payments all year
  • You will always be on supply and have access to energy
  • Usually the cheapest way to pay
  • Easier to budget with a fixed amount


  • If you are paid weekly or fortnightly, a large monthly direct debit can be unsuitable
  • Meter readings need to be submitted to ensure accurate payments
  • You’ll pay more than you use in the summer but will keep prices down over the winter


Standard Credit

This can also be known as paying upon receipt of the bill. This is the default payment method if you do not have anything else set up. Suppliers will send you a bill at set intervals either monthly, quarterly or sometimes bi-annually. They will then ask you to make payment within a set amount of time after you have received the bill.

There will be a variety of ways to pay, including at paypoints and post offices, online or by telephone.


  • You only have to think about bill when it arrives
  • You will always be on supply with access to energy
  • You always pay for fuel after you have used it, and if meter readings are submitted will pay only exactly what you have used
  • A variety of ways to pay the bill are available


  • Difficult to budget due to seasonal variation as we use significantly more energy in winter, meaning you may get large winter bills
  • Unexpectedly high consumption can lead to fuel debt
  • Accurate meter readings need to be submitted
  • Usually the most expensive way to pay


Payment plans

A payment plan is essentially a standard credit account but rather than paying when the bill arrives you will agree with your supplier to pay a set amount to cover the bill. You may be provided with payment cards to do this at your local shop or can set up a standing order from your bank account.


  • You can pay weekly, fortnightly or monthly
  • Easier to budget than paying a large bill
  • You will always be on supply with access to energy


  • If payments have been set to low and meter readings are not submitted you can fall into arrears
  • Usually the most expensive way to pay



Prepayment requires you to pay in advance for the energy you want to use. This is achieved by fitting a special meter to your home or switching the mode on your smart meter. You will not have a set amount to pay but will need to ensure you top up your meter with enough credit to cover your energy consumption. If you do not have enough money in your meter you will be disconnected and will not have access to energy until you top up again.

As of July 2023 the ‘Prepayment Premium’ ended and prepayment tariffs are the same price as standard variable direct debits.


  • You only pay for energy that you will use
  • Can help you budget your money and available top-ups
  • Can be calibrated to recover debt at a more affordable repayment rate
  • You can’t build up further arrears


  • How much you top up will vary seasonally and you can end up needing to top up significantly more in winter
  • If you don’t top up your meter you will need to cover standing charges before you can access your energy again
  • If you can’t afford to top up and your meter runs out of money you will be cut off from supply


Fuel Direct

Fuel direct is also known as third-party deductions and is an agreement between your energy supplier and the Department for Work & Pensions (DWP) to deduct the costs of your energy from your benefit payments before you receive them. Your supplier will need your agreement before writing to the DWP to request the deductions. You can only apply if you are in arrears with your supplier.


  • Payment deducted from benefits before you receive them
  • Easy to budget as your priority costs are dealt with before you get paid
  • You will always be on supply with access to energy
  • Can be used to recover debt at an affordable repayment rate


  • No flexibility with payment amounts
  • Can fall into further arrears
  • If your benefits are stopped, your fuel payment is stopped


Support from Cosy Kingdom

Do you need more advice on payment methods? Our energy advisors are always happy to help.

Our energy advisors can be contacted by:

Calling 01592 807930

Texting COSY then YOUR NAME to 88440

Emailing info@cosykingdom.org.uk

Through our website

Or on our Facebook and Twitter social media pages.