One money saving tip that you may not be aware of are prepaid wireless phone plans. With a prepaid plan, there is no contract unless you are paying for your phone in installments as opposed to outright. With a prepaid plan, you prepay for your wireless service monthly or for several months or even a year at a time. Oftentimes the more months that you are willing to prepay, the lower your total cost will be. Hence, why I just prepaid for an entire year of service! By doing this, I received about a 40% discount on my prepaid plan. By prepaying my plan for the full year, the cost of the plan averages out to $25 per month. Not bad right??
Now the traditional cell phone/wireless plan is called a contract or postpaid plan. This type of plan locks you into a contract with your wireless provider for a two or three year term. Each month your provider will send you a bill to pay an amount based on the plan that you have selected and any overages incurred. Postpaid plans are normally the pricier option versus a prepaid phone plan. Many people are paying between $80-100+ per month per line on a postpaid plan. If you are on a family plan, that price usually goes down some since you receive a discount for having multiple lines.
In the USA, prepaid plans are not quite as popular as postpaid plans. However, they are a nice option, especially if you are watching your budget. Also, prepaid plans are becoming more popular due to their attractive pricing, availability, and flexibility.
Below is a list of some of the larger low cost prepaid wireless providers:
- Mint Mobile
- Visible
- AT&T
- PureTalk
- T-Mobile
- Straight Talk
Let’s further discuss some of the advantages and disadvantages of buying a prepaid wireless plan.
Advantage #1 COST. As detailed above, you can see how much lower the cost of a prepaid plan is especially if you are on an individual plan. Many people will see an up to 50% monthly cost savings by moving to prepaid.
Advantage #2 FLEXIBILITY. If you bring your own phone or buy a phone for retail price, you will not be tied to a contract. Additionally, there are some Android smartphones that cost between $200-$400 at retail price. Many of these are quality smartphones priced reasonably for those that don’t require an iPhone. When you are on a prepaid phone plan, if you decide that you want to move to another wireless carrier, go ahead, you are free as a bird!
Advantage #3 TAXES AND FEES. This ties back into cost, but prepaid or no contract plans typically have lower taxes and fees associated with them. I only had to pay $3 in taxes and fees when I purchased my whole year of prepaid wireless service. A postpaid plan will normally have higher taxes and fees added to your monthly bill. Taxes and fees on a postpaid plan can range from 15-25% of your bill. That is significantly more expensive and must be taken into consideration when signing up for a wireless phone plan.
Advantage #4 OVERAGE FEES. Since you are prepaying for your phone service, there is typically no way to receive “overage” charges like there is on a postpaid plan. If you use up all of your data, the prepaid carriers will typically just slow down your internet speeds or shut your internet off. On a postpaid plan, they will charge you for overages and you will receive a nice extra charge on your monthly bill. Little and sometimes big fees/charges can be tacked on to your monthly bill with a postpaid plan. These surprise fees won’t show up on a prepaid plan.
Disadvantage #1 WIRELESS COVERAGE. The wireless coverage on a prepaid plan might not be quite as extensive as a postpaid plan. Many of these prepaid plans run on major carrier networks, but wireless service may be slightly less broad or deprioritized when compared to a postpaid plan. I personally have very good coverage on my prepaid plan so I haven’t experienced that issue. However, all of the wireless providers are different so you have to do your research. Additionally, where you live is an important factor regarding the quality of wireless coverage that you will receive on a prepaid plan.
Disadvantage #2 LIMITED WIRELESS PHONE OPTIONS. Many of the prepaid plans offer less phone purchase options when compared to postpaid plans. You may not be able to buy the latest iPhone model with a prepaid plan. However, that does not preclude you from buying the phone outright from the manufacturer and then potentially adding it to a prepaid plan (make sure the phone is unlocked so it can be used on any carrier). It will cost you a pretty penny to pay for a phone at full retail price, but it is an option. Also, you might be able to purchase last year’s iPhone model on a prepaid plan which is still a pretty darn good phone!
Disadvantage #3 CUSTOMER SUPPORT. When you sign up for a prepaid phone plan, the post customer service that you receive may not be great. Many of the prepaid wireless carriers do not have retail stores so prepare yourself for a potentially lengthy phone call if you ever need support. The larger carriers that offer prepaid service may be able to support you in a retail store or on the phone. Since I have been on a prepaid plan, I typically only need customer support once every 4 or 5 years so this hasn’t been a problem for me.
If you decide that you want to give prepaid a chance, the most difficult decision is determining which prepaid wireless company to use. I recommend doing some Google research, article reading, and sticking with the more well known wireless companies (there are a lot of prepaid wireless carriers to choose from!). If you find a prepaid provider that you like, it may save you hundreds of dollars annually compared to a postpaid plan. It will take time and effort to move to a prepaid phone plan, but making the switch could be VERY good for your wallet.
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