Are Prepaid Providers Out To Take Advantage of the Poor?

by admin on June 5, 2012

A common claim is that prepaid electric companies have a business model based on taking advantage of the poor and helpless. In reality this is not exactly true. I have seen several people get in situations where they get charged outrageous prices by their prepaid company and have to allow the lights to go out rather than shell out another prepayment.

For most of us the prepaid provider offers us a loan that ranges from $300 – $800 depending on how bad your credit is. You see a traditional energy company will check your credit and then ask you for a pretty steep deposit amount to get electricity turned on in your name.

The prepaid company does not check your credit or ask you for a deposit. Instead you simply pay for your electric service in advance and many times at a slightly higher rate compared to traditional post paid providers.

A bank would not give this same person a loan to get lights on at their apartment, most other places would likely decline giving someone a loan with bad credit but these prepaid companies turn on their electricity and save them hundreds of dollars they do not have to hand over to a company for a year.

Now there are no deposit companies that will offer you a no deposit offer but will charge you 5 cents per kilowatt hour more than a traditional provider. Charging excessive amounts like this is not right but provided you go with a legitimate provider that offers prepaid service you will be fine.

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