Can I use a payday loan to pay for energy bills?

Large and unexpected one-off bills are one of the most common uses for payday loans, but is applying for credit the best first step for an energy bill?

If you’re struggling to pay your energy bills, it might be tempting to take out a short-term loan to quickly cover the costs. But before borrowing and committing to a loan, it’s important to explore all of your options, and understand where you can find support.

The following guide explores what to do when you receive a large utility bill you haven’t budgeted for. We also look at whether payday loans are a sensible option, while signposting some alternative ways to get financial help.

In this guide: 

• Can you use payday loans to help pay bills?
• Top tips for talking to your energy provider
• Understanding energy costs and the price cap
• What are some alternative funding options?
• Budgeting tips for managing priority bills
• Using payday loans for utility bills: Final thoughts

Can you use payday loans to help pay bills?

When an unexpectedly large bill lands and you haven’t got an emergency fund to fall back on, it can be difficult to know where to turn. Energy bills are essential for keeping your home safe and warm, and missing payments can create challenges for both your daily life and your finances.

If you’re struggling to pay, your first step should be to contact your provider to make them aware of the situation. You should be able to negotiate an agreement to pay the balance in a way that is manageable, and they might also offer additional support, such as:

• Short-term pause on payments: You can ask your supplier to pause your payments for a short period. However, while they must consider your situation, they don’t have to agree to a pause.
• Payment plans: A payment plan allows you to spread the cost over several months instead of paying it all at once, easing the pressure on your monthly budget.
• Access to support funds and hardship schemes: From the British Gas Energy Support Fund to the Octopus Octo Assist Fund, many energy suppliers offer grants to customers who are struggling.

By contacting your provider early, you could avoid additional issues like extra charges or damaging your credit score.

Top tips for talking to your energy provider

If this is the first time you’re contacting your provider about payment difficulties, you might be wondering where to start. First, check a recent bill or visit their website to find their contact details, then keep the following tips in mind:

1. Be open and honest: Clearly explain what’s changed, why you’re struggling to make the payment, and be ready to provide as much detail as possible.
2. Ask about hardship schemes: Support funds, grants, and payment holidays are a few of the ways energy providers might be willing to help.
3. Check eligibility for discounts: From the Warm Home Discount to Winter Fuel Payments, check whether you’re eligible for energy discounts. Local council energy support is often available too.
4. Keep clear records: Note down the date of the conversation, the name of the person you spoke with, and what was agreed. This can come in handy if you need to follow up for any reason.

Understanding energy costs and the price cap

In 2025, the average annual energy bill for a UK household sits at around £1,755, or £146 per month. However, the exact cost will depend on a variety of factors, including the size of your property, its heating system, and the number of people you live with.

If your latest energy bill feels unexpectedly high, increased usage might not be the only reason prices have jumped. The energy price cap, set by Ofgem, is the maximum amount an energy company can charge households on a standard tariff. However, this cap can rise due to changes in wholesale energy prices, meaning bills can increase even if you haven’t used more energy than usual.

Looking for more information on this? Our guide on how to deal with the energy price cap rise has tips to help you manage the impact.

What are some alternative funding options?

Before considering a loan for household bills, here are some alternative ways to get the financial support you need:

1. Charity grants

Charitable trusts, like the British Gas Energy Trust, offer grants to UK households in need of support. These grants are open to applications from everyone, meaning you don’t have to be a British Gas customer to be eligible. The trust also funds local organisations that offer money, benefits, and energy-saving advice.

2. Government grants and discounts

If you’re struggling to pay your energy bills, don’t forget to check your eligibility for government grants. For instance, the Winter Fuel Payment can help with heating your home in the colder months. To be eligible, you must have been born on or before 22nd September 1959.

There’s also the Warm Home Discount Scheme. This offers a £140 discount on electricity bills to low-income households, as well as those receiving certain pension credits.

3. Borrowing from friends or family

If possible, borrowing from a family member or friend might be another way to cover the payment. While it might feel tricky to let someone know you’re struggling, it can help you get back on track and avoid high-interest credit. Just make sure that you set clear repayment terms to help keep things stress-free. Check out our full guide on borrowing money from your family and friends.

Budgeting tips for managing priority bills

Wondering how to improve your finances and take better control? A well-planned budget is key. So, here are some effective monthly budgeting tips:

• Review subscriptions and non-essential spending: Look at your non-essential spending to see if there is anything you can pause to free up some cash. Once all of your priority bills are covered, you can then see what funds you have left over to work with.
• Track your spending: Budgeting apps and spreadsheets can be a huge help when it comes to tracking your income and outgoings. Our guide on managing your personal cash flow includes everything you need to know.
• Build an emergency fund: There’s no need to put away huge amounts of cash each month, as even saving little and often can give you a safety net to fall back on. Set a savings goal, open a dedicated account, then pay in what you can when you can.

Using payday loans for utility bills: Final thoughts

Payday loans can help you raise funds for unexpected expenses without delay, and if you pass the eligibility checks, you can often receive the money in as little as 24 hours.

If you’re considering a short-term loan for an unexpected energy bill, responsible borrowing is key. Consider your priority finances and make sure you’ll be able to comfortably meet the repayments.

It’s also important to create a plan for any future surprises that may occur. This might involve creating a monthly budget, cutting non-essential spending, and speaking to your energy provider if you’re struggling with ongoing payments.

Beyond energy bills, we also see customers using our loans to repair or replace a household appliance, helping to get things back up and running smoothly.

Explore more helpful resources

If you’re looking for more advice on managing your finances, just head over to the Moneyboat blog. There you can explore tips on how to reduce your energy bills, as well as payday loan alternatives.

And don’t forget, if you’re struggling or unsure where to turn, there are a variety of free and independent support organisations out there to offer support, including:

• Citizens Advice
• MoneyHelper
• StepChange