Did you know that Texas has about 300 retail electricity providers? As such, customers can choose among them based on their pros and cons.
They can also find electricity companies with no deposit from these options, REPs offer no-deposit plans to customers with either good or bad credit. The terms of these plans vary, so compare them before you sign up. Doing this can help you find one that meets your needs and budget.
No-deposit plans need you to pay a higher monthly rate than a traditional plan. The higher rate helps offset the risk that the provider takes on by not asking for a deposit. Here’s what it takes to find a no-deposit plan in Texas.
No-Deposit Plans Explained
No-deposit electricity plans are electricity plans that don’t need you to pay a security deposit. They’re a great option for customers with less-than-perfect credit. REPs offer them to help you avoid the upfront cost of a deposit.
However, these plans have higher monthly rates than the traditional plan. It’s because they don’t have a deposit requirement. Despite the higher monthly rate, no-deposit plans can save you money in the long run, especially if you have a low credit score and would otherwise have to pay a large deposit.
There are a few different ways that cheap electricity with no deposit works. One way is that the provider will charge a higher monthly rate for the first 12 months of service. After that, the customer’s rate will decrease to the regular rate.
Another way that no-deposit plans work is that the electricity provider will charge a higher monthly rate for the entire contract length. Either way, the plan will have early termination fees. So be sure to read the terms carefully before signing up.
How to Avoid Deposits
Often, deposits can be as much as 20% of your annual electric bill. In Texas, that can mean $200 to $350 or more. Thankfully, there are ways to skip this fee.
First, having a good payment history can also help you enjoy this benefit. If you sign up for a prepaid plan, you will not pay a deposit.
Pay your bills on time to build a good payment history with your electricity provider. If you do this, your electricity provider will see that you are a reliable customer. They’ll be more likely to offer you good rates and terms in the future.
Setting up automatic payments can help. It ensures that you never miss a payment. You can set up automatic payments through your electricity provider’s or bank’s websites.
You should also understand your bill and ensure you are paying the correct amount. If you have trouble paying your bill, you may have certain rights under the law. Since it may take some time to build a good payment history, keep paying your bills on time, and your creditworthiness will improve.
Pros and Cons of No-Deposit Plans
No-deposit electricity plans are a good option for customers who have bad credit. They also favor those who want to avoid the upfront cost of a security deposit. Despite this, you should carefully weigh the pros and cons before signing up.
A security deposit for an electricity plan is a sum that a customer pays an electricity company upfront. The provider holds on to the amount as a guarantee that the customer will pay their bills on time. If the customer defaults on their bill, the provider can use the electric deposit to cover the outstanding balance.
Retail electricity providers usually demand a deposit from customers with bad credit. They also ask for the same for those who didn’t have an electricity account in the past. But with a no-deposit plan, you can avoid this upfront fee.
The plan can save money on your monthly electricity bill. The savings from avoiding the upfront cost of a security deposit can sometimes offset the higher monthly rate. As you enjoy the cost savings, you can build your credit history and try to pay your bills on time.
Electricity providers have strict requirements and set higher rates for customers with poor credit. But with no deposit energy plans, you can still get electricity service even with bad credit. They are a relief if you didn’t qualify for traditional electricity plans due to your credit history.
No-deposit electricity plans cost more because electricity providers take on more risk. The providers are more likely to lose money if the customer does not pay their bills. Electricity providers need to make a profit, and they cannot do this if they offer no-deposit plans at the same price as traditional plans.
If you need to switch providers before the end of your contract, you may have to pay a fee. Termination fees help electricity providers protect themselves against risk. If a customer signs up for a no-deposit plan and terminates the contract early, the provider may charge a fee to recoup some of the losses they incurred.
The termination fee amount will vary with the electricity provider and the plan’s terms. It’s a percentage of the monthly rate the customer would pay if they stayed in the contract for the full term. If you are unsure about anything, seek professional support.
Types of No-Deposit Electricity Plans
There are two main types of no-deposit electricity plans: prepaid plans and no-deposit plans for high credit scores. A prepaid plan may be a good option if you want to control your spending. But if you have good credit and want to avoid a security deposit, a no-deposit plan for high credit scores may be a good option.
With a prepaid plan, customers pay for their electricity upfront. As such, you must have enough money to cover your electricity usage. The REP will ask you to top up the account to use electricity.
Prepaid plans are perfect for customers who want to control their spending. You can only use as much electricity as you have paid for. So, you will never be surprised by a high electricity bill.
No-Deposit Plans for High Credit Scores
If you have an excellent credit score and don’t want to pay a security deposit, consider no-deposit plans for high credit scores. To qualify for this plan, you need to pass a credit check. You can enjoy the service without paying a security deposit if you qualify.
A credit check will show information on your past payments on loans and other debts. A good payment history indicates that you’re likely to make timely payments. But a poor payment history indicates a history of making late payments or defaulting on loans.
The credit check also looks at your debt-to-income ratio. A debt-to-income ratio is the debt you owe compared to your income. A low debt-to-income ratio indicates that you carry less debt, making it easier to pay for new debts.
Your credit inquiries also form part of the credit check. They are the number of times someone has checked your credit report in the past few months. Many credit inquiries can indicate that you are applying for a lot of new credit, making REPs less likely to approve you.
Choosing a No-Deposit Electricity Plan
Compare different plans from different electricity providers to find the best one for your needs. While doing this, pay attention to the monthly rate, terms and conditions, and customer service. The monthly rate is the amount you will pay monthly for your electricity.
No-deposit electricity plans have certain terms and conditions. These terms outline the plan’s specific details, such as the early termination fees and the minimum contract term. They vary with the provider and your eligibility.
Look for plans that offer a grace period when choosing an electricity plan that doesn’t require a deposit. The grace period gives you a certain number of days after your account balance runs out before the provider disconnects you from the electricity grid. It allows you to load more money into your account and decide whether to switch providers.
Additional Factors to Consider
A good retail electricity provider will be transparent about their pricing. As such, they will clearly explain how they calculate their rates. They’ll also not have any hidden fees.
Consider a retail electricity provider with good customer service. You’ll be certain that they will be responsive to your questions and concerns. It also shows that they can help you resolve any problems.
An ideal retail electricity provider will be reliable. They can offer you electricity when needed and will not have any major outages. They’ll also have green options, allowing you to choose an electricity plan powered by renewable energy sources, such as solar or wind power.
Looking for Electricity Companies – No Deposit?
Electricity companies with no deposit can be a great way to save money on your electricity bill. When reviewing no-deposit plans, compare the monthly rate, the terms of the plan, and any early termination fees. You should also choose a REP with good customer service to get help if you have any problems with your account.
If you’re looking for a Texas-based electricity provider offering energy plans to meet your needs, Ambit Energy VIP Energy Service is here to help.
You can choose between fixed-rate and variable-rate plans and manage your accounts online through MyAmbit Account. Join us today and experience the Ambit difference.