- We’ll explain why providers sometimes require deposits.
- We’ll discuss the types of no-deposit electricity available.
- We’ll tell you how to find the right no-deposit option.
Why do electricity providers require deposits?
If you’ve ever shopped for electricity in Texas, you may have run into an energy provider asking for a deposit before it will allow you to become a customer. Though deposits are 100 percent refundable with on-time payments, they often range up to a few hundred dollars. That’s a pretty hefty sum when you’re not expecting it.
The reason is simple: Providers have to make money. When customers default on bills, the provider has to recover the cost somehow. Each provider evaluates customers before they enroll to determine if they pose a risk for lagging on their bill payments, and they assess deposits accordingly.
How do providers decide if I need to pay a deposit or not?
These decisions are based on credit thresholds, which are credit levels below which providers will not accept customers or will only accept customers after they pay a deposit. Every electricity provider sets its own credit threshold, which can range from very low to very high. Additionally, some companies rule out all customers below a certain credit level. It all depends on the type of customer a specific company is willing to accept. Let’s look at a few examples:
|Credit Level||Provider A||Provider B|
|High||No Deposit Required||No Deposit Required|
|Medium||Deposit Required||No Deposit Required|
|Low||Deposit Required||No Service Offered|
In this example, customers with high credit scores could base their plan decision on rates and other factors, since neither provider requires a deposit. Customers with medium and low credit, though, have a little more to think about.
Provider A might look like the better option, because it offers options across the board of credit levels, while Provider B only accepts customers with medium or high credit. However, medium credit customers may actually have more success with Provider B, because they do not require a deposit while Provider A does. This is because of where the companies have set their credit thresholds. Low credit customers, meanwhile, only have one option: a deposit plan with Provider A.
All this said, choosing the right provider for your credit level can save you a lot of money. Luckily, there are way more providers – and options – on the market, than in the example above. When you shop with Atlas, we factor in these credit thresholds to understand what your total energy cost will look like. Then, we search plans from the providers we work with to find no-deposit options, so you won’t have to hunt.
What if I’m building up my credit or just have no history yet?
That’s the good news here. Credit isn’t permanent. Your options for an electricity plan will change over time as your credit changes. If you’re building credit back or starting your history for the first time, rest assured that we’ll find you a plan that works for now and help you readjust later as better options become available.
Atlas works with Texans in every stage of the electricity buying journey. We’re not here to make a sale for the providers. We’re here to find the right electric plan for you, regardless of your credit situation. And we don’t want our first sale with you to be our last sale with you. We want you to come back every time you need to buy a plan.
If I’m quoted for a deposit on one plan, could I choose another plan from that provider without a deposit?
If you are quoted a deposit for one energy plan, you will be quoted a deposit for every plan from that provider, unless it offers a prepaid plan option.
Credit thresholds are set by provider – not by plan. This means that if you need to pay a deposit for one plan with Provider A, switching to a different plan with Provider A will not change the deposit you need to pay. However, you might be able to choose a plan with Provider B and avoid a deposit. Or, if Provider A offers a prepaid electric plan, you can choose this without a deposit too.
While this is all legal, it isn’t particularly fair, and often means Texans with poor credit – or no credit record at all – are left without many options for their energy supply. That’s where Atlas can help, with a few different no-deposit options.
- 1Energy providers assess deposits depending on how likely they think you are to default on payments.
- 2Each provider sets different credit thresholds, which are credit levels below which they will not accept customers or will only accept them if they pay a deposit.
- 3Deposits are determined per provider, not per plan. If you are assessed a deposit on one plan from a provider, you’ll be assessed the same deposit for another plan from that provider.
- 4Atlas looks for no-deposit options for you automatically, so you can get a full picture of your choices.
What are the types of no-deposit energy plans?
“No-deposit electricity” means different things depending – you guessed it – on your credit score. That said, don’t panic if you have bad credit or no credit history. We can still help you find an electric plan. Let’s examine some options.
Traditional energy plans
Many Texans qualify for “no-deposit electricity” with traditional energy plans. When we say “traditional,” we mean plans where your bill is calculated after you use electricity and sent at the end of your billing cycle. This includes the majority of electric plans.
What does this mean? It goes back to the credit thresholds we’ve discussed. If your credit score exceeds the threshold set by a provider, you will not have to pay a deposit for the electricity plan you select with that provider. This means that no-deposit energy is different for different customers. You might have to pay a deposit for an energy plan while your neighbor does not have to pay a deposit for that same plan, or vice versa. For this type of no-deposit electricity, it all depends on your credit score.
The second type of no-deposit electricity is a prepaid energy plan. This option is common because everyone is eligible for prepaid plans. It does not matter if you have bad credit or no credit history at all. You’ll be able to get electricity through a prepaid option. These are also called “pay-as-you-go” plans, because you’re paying in advance only for the energy that you will need and can top it up if you need more.
|Pros of Prepaid Electricity||Cons of Prepaid Electricity|
|No contracts, credit checks, or deposits||Requires payment to start service|
|No early termination fees||Higher rates|
|Can be variable or fixed rate||Minimum account balance required|
Which no-deposit electricity option is right for me?
Your ability to access traditional energy plans without paying a deposit will depend on your credit score, as we’ve mentioned. If you have a no-deposit option for a traditional energy plan, you should absolutely consider it.
As for prepaid electricity, there are positives and negatives. While prepaid electricity may seem tempting, here’s the truth: if you are able to pay a deposit with another provider, you should pay the deposit. Why? The cons of prepaid electricity outweigh the pros. Consider the following:
- High prepaid rates cost more in the long term.
- With a prepaid plan, you still have to pay money today – just for the electricity you will use this month instead of a deposit.
- Deposits are 100 percent refundable with on-time payments.
With prepaid electricity, you’re not getting any money back at the end. What you pay is what you pay, high rate or not. With a deposit plan, you have a chance to get that money back. Prepaid plans should really be used as a last resort, for residents who do not qualify for deposit plans or cannot afford to pay a deposit.
Can I get an electric plan without paying a deposit?
At Atlas, we’re able to match almost 80 percent of customers with a traditional energy plan that fits their needs and does not require a deposit. That means odds are pretty good we can do the same for you. How do we manage that?
We were built to work for our users, not Texas electricity providers. We’re committed to finding a wide range of electricity providers so all our users can access energy at a fair price. This means building a marketplace with a variety of credit thresholds and no-deposit choices.
When you start shopping, our algorithm will automatically check for no-deposit options with all our providers. If a plan you’re considering requires a deposit, we’ll let you know and show you no-deposit options to compare with it. If you fall into the 20 percent of our users who don’t have a traditional no-deposit option, we can show you how a deposit plan could work for you or point you toward a prepaid (and no-deposit) option.
The bottom line: We won’t hang you out to dry. Atlas was built to work with all Texans from all walks of life, regardless of your finances or payment history. Enter your address to see what real transparency can do for you.