Families who are still using old-style prepayment meters can beat next month's energy price cap rise if they act now.
The loophole - which only works on old-style prepayment meters, not smart meters - lets you top up your meter now and pay pre-April rates for your energy until you have to top it up again.
Households are braced for the increase in the energy price cap from next month, and those on prepayment meters are hit hardest, with the cap going up to an average of £2017 per year, £37 more than the £1,971 average bill for those on standard credit meters.
Read more: What is the energy price cap and why is it in the news now?
There are around four million households on prepayment meters in the UK, according to the energy regulator Ofgem. Some homes have always had them. Other households, however, will have had them fitted by suppliers after going into debt on their energy bills. Landlord often have prepayment meters fitted for their tenants.
Here we take a look at how the loophole works and what to do:
How does the hack work?
When a price change takes effect, for those with older prepayment meters, the information about the new rates is sent to the terminals where you top up your key or card. This is transferred to the card when you top it up, then to your meter when you next plug the card in.
That means you'll only start paying the new rates once you top up after Friday April 1. So you could put as much credit on your meter as you can afford and then use that for as long as possible – delaying having to pay the much higher rates under the cap from April.
As soon as you top up your meter again after April 1, it will update your meter with the new rates, so don't top up after April 1 until you need to.
What is a prepayment meter?
Prepayment meters are electricity and gas meters that work on a pay-as-you-go basis. You have to top up the meter before you can use gas or electricity. Suppliers can also use the meter to claw back debt that built up on your account before the prepayment meter was fitted.
How do I know if I have an old-style meter or a smart meter?
If you top up your meter by app, on the internet or by your phone, you have a smart meter. If you have to take a key - or token - to a Paypoint or Payzone point in a newsagents, garage or Post Office to top it up, you still have an old-style meter and this hack will work for you.
Why doesn't it work on a smart prepayment meter?
If you have a smart prepayment meter, this won't work as these meters are updated remotely with the new rates on the day of a price change.
How much can I add on?
There is a limit on how much you can top up each time, and how much credit your meter can hold. Moneysavingexpert.com asked all the big names and they said that usually you can top up between £1 and £49 at a time, while the meter itself can typically hold up to £249 for electricity and £999+ for gas (depending on the meter). So to max the trick, you'd have to pay a few visits to the top-up shop.
When will the tariff change?
The tariff changes on April 1.
Can I do this regardless of which company I am with?
Mostly yes, as long as you're not with Scottish Power.
MoneySavingExpert said the tip works for most energy suppliers, including British Gas, Bulb, E.on, EDF, Octopus, Ovo and SSE . But Scottish Power customers shouldn't stockpile, as the company said the additional amount you would've paid under the new rates would be recovered by adding a small amount of debt to your meter at your next annual statement.
It is probably worth checking with your supplier to see if they will continue to charge the lower price if you top up before the energy price cap rise.
How long have I got to do this?
You have until Thursday, March 31 to top up at the old rate.
What are the pros and cons of a prepayment meter?
Prepayment meters can be a useful way of keeping on top of your energy use and managing your budget, as paying for your energy before you use it lets you pay small amounts often, and it means you’ll never overpay.
However prepayment meters can be inconvenient as you need to remember to top up keys and smart cards. If you can’t reach a shop to top up, you could run out of credit and your energy will be switched off. What’s more, if you lose your card or key, it can take time to a temporary one to be arranged.
Energy suppliers must offer emergency credit to customers who can’t afford to top up their pre-payment meter, or if they can’t get to a shop to buy credit.
I have a fixed rate tariff. Will this work for me?
This tip will only work for customers on the standard variable tariff, which is protected by the energy price cap.
I am repaying debt via my meter. How does that work?
Prepayment meters are often used to pay back debt that you have accumulated in the past.
If you have debt, there will still be some gain using this trick, but most suppliers will take an additional amount on top of what you use yourself. Some suppliers, such as E.on Next, require you to top up weekly if you're repaying debt so the saving you might make using this hack is limited.
Does it definitely work?
Ofgem has confirmed to Martin Lewis that this trick should work.
An Ofgem spokesperson told Moneysavingexpert.com: "Smart prepayment meters update prices automatically – so topping up in advance would not make a difference. With non-smart prepayment meters, the price customers pay is fixed at the point they top up.
"This means that any built-up credit is spent based on the price of energy... [when] that credit was purchased. So a price increase could temporarily be avoided by building up credit in advance, though this would also work the other way if the price went down."
