In message , Adrian
writes

So as long as I have pre-pay on my Oystercard (zones 2 & 3 only), I don't
need to buy an extension ticket when I travel into Zone 1 - it should take
it £1.60 extra off my pre-pay?

That's correct.
But if you go out of zone 2 - 3 and have no Pre Pay, you won't be able
to use your Oyster in your valid zones until the debit has been repaid.

BTW, people who are still buying magnetic extension tickets (which of
course don't register on the Oyster) need to take ticket and Oyster to
the ticket window to have it sorted out on the TOM (Ticket Office
Machine)

I advise people to keep some Pre Pay on their period ticket Oysters.
The number of times people have told me that they haven't travelled out
of zone until I read them their travel history is surprising. I don't
believe they're trying to pull a fast one; most genuinely don't realise
it.
--
Kat Me, Ambivalent? Well, yes and no.