Here’s a detailed overview of the advantages and benefits of prepaid phone plans versus the more traditional postpaid plans…
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KEY TAKEAWAYS
- Prepaid phone plans can be more affordable than postpaid plans, as you only pay for what you need. Just make sure you go with the best prepaid plans to get the most bang for your buck.
- Prepaid plans offer more flexibility, as there are no contracts and you can change plans or providers more easily.
- Prepaid plans can be a good option for those with poor credit or those who don’t want to undergo a credit check.
- Prepaid plans often come without hidden fees or other surprise charges.
- Prepaid plans can be a good option for those who want to keep their phone usage private or for those who only need a phone for emergencies.
- Prepaid plans may have limitations on phone selection and coverage areas, so it’s important to research your options before making the switch.
How Prepaid Phone Plans Work
Whether you own your phone outright or you’re looking to save some money on your monthly phone bills, switching to a prepaid plan comes with quite a few benefits that you might not know about.
I know, I know – this kind of stuff, phone plans and data allowances, isn’t exactly exciting.
But if having even a passing knowledge of how prepaid plans work can put some extra cash in your pocket, perhaps it is worth investigating?
First, let’s cover off what a prepaid phone plan actually is:
A prepaid phone plan is a mobile phone service where you pay for your usage in advance, rather than at the end of a billing cycle.
You purchase a set amount of call minutes, text messages, and data in advance, based on your specific requirements, and you then run the plan each month, topping it up when appropriate, either manually or automatically.
Once your balance runs out, you then have to add more funds to your account.
Again, you can do this manually or, as is the case with most carriers, do it automatically via a monthly wire transfer from your account.
With a postpaid plan, you pay a monthly fee upfront each month – usually much higher than what you would on a prepaid plan – and this fee is fixed, regardless of how much or little you use your phone.
Advantages of Prepaid Phone Plans
- No contract required
- No credit check required
- Lower monthly fees, pay only for what you need
- Can easily change plans or providers without penalty
The main USP of a prepaid phone plan is that it is cheaper than a traditional postpaid plan. You get all the data, texts, and calls you need but you’re not locked into an expensive monthly fee.
If you want to reduce the cost of your prepaid plan, you can either use your phone less, so the data carries over into the next month, or downgrade to a cheaper plan with less data.
And because you’re not locked into a 12 or 24 month engagement with the carrier (in most cases), you’re always free to shop around for a better deal.
So, if you know that you only ever use 8GB to 10GB of data a month, and you’re paying $80 per month for unlimited data, perhaps it’d make more sense to go with a cheaper prepaid plan?
There are plenty of excellent prepaid plans that come with unlimited data too. But there’s also really awesome value plans that come with 10GB of data or 15GB, and these ones start from around $15 per month which is WAY less than $80 per month.
Prepaid vs Postpaid Phone Plans
If prepaid plans are so good, then why isn’t everybody using them? That’s a good question and it is a pretty tricky one to answer for a variety of reasons.
Postpaid plans, while expensive, do come with some advantages over prepaid phone plans.
For instance, if you go with one of Verizon’s premium postpaid plans, you’ll get access to its Ultra Wideband 5G network, loads of freebies (Apple TV+, HULU, Disney+), and premium network access, so your data is never slowed down.
This is how the big carriers lock people into expensive monthly postpaid plans. They give you access to stuff that makes you think you’re getting good value for money – faster data, subsidised phones, freebies like subscriptions to streaming platforms and free tech products like AirPods.
But for all of these things, you will pay around double – or, in some cases – TRIPLE the monthly cost when compared to a prepaid phone plan.
All things equal, I think it is fairly safe to assume that the main reasons why some people favor postpaid plans are as follows:
- Often times, those on postpaid plans get better access to customer service reps as part of their contracts.
- They may also get discounts or, in some cases, subsidised phones as part of the contact which lowers the cost of getting the latest and greatest smartphones.
- Access to more wider selection of phones
- Extras like discounts or free stuff (like AirPods or subscriptions to streaming platforms like Disney+, Apple TV+, and HULU).
- Faster 5G speeds via more advanced network technology. Case in point: Verizon’s prepaid plans DO NOT get access to its Ultra Wideband 5G network.
Ironically, though, if you go with Verizon’s MVNO network, VISIBLE, you can get a prepaid plan with unlimited data that DOES get access to Verizon’s ultra-fast Ultra Wideband 5G network.
Here’s a quick overview of the main differences between a prepaid phone plan and postpaid phone plan.
| Feature | Prepaid Plans | Postpaid Plans |
|---|---|---|
| Payment | Pay in advance for a set amount of usage | Pay at the end of the billing cycle for usage |
| Contract | No contract required | Contract required, usually for 1-2 years |
| Credit check | No credit check required | Credit check required |
| Monthly fees | Lower monthly fees, pay only for what you need | Higher monthly fees, typically with unlimited usage |
| Plan changes | Can easily change plans or providers without penalty | Can be difficult to change plans or providers mid-contract |
| Phone selection | Limited phone selection | Wide selection of phones, often with discounted pricing |
| Coverage | May have more limited coverage areas | Typically has wider coverage areas |
| Customer service | Limited customer service | Often has dedicated customer support |
What To Know Before You Switch
Compatibility With Your Device
Before switching to a prepaid phone plan, it’s important to make sure that your device is actually compatible. If your current phone is carrier-locked, this may prevent you from switching to another network.
You can, of course, get the phone unlocked but this will cost you a fee. This is also important to keep in mind when buying a refurbished phone; you’ll want to make sure that it is completely unlocked.
Carrier locked refurbished phones are cheaper, so if you know what carrier you’re going to get your prepaid plan with, you can save some additional cash this way, although I wouldn’t advise this approach.
You’re just creating yourself potential headaches farther down the line.
Be sure to check the requirements for the plan you’re considering and make sure that your device will work with the service.
Coverage Availability
Another important consideration when switching to a prepaid phone plan is coverage availability.
Prepaid plans may have more limited coverage areas than traditional postpaid plans, and you may not be able to get coverage in certain areas.
This will only be a problem if you’re going with an ultra-cheap, off brand prepaid plan. If you ensure that you go with the best prepaid plans on the market, coverage will not be an issue.
Make sure to check the coverage map for the carrier you’re considering and make sure that you will be able to get coverage in the area where you live.
International Coverage
Some prepaid plans may offer international coverage at an additional cost, while others may not offer international coverage at all.
There are plenty of prepaid plans that offer international call and texting, so if that is important to you make sure you go with one of these prepaid plans.
Prepaid Plan Restrictions
Some plans may limit your data speeds after a certain amount of usage, or may have restrictions on tethering or using your phone as a mobile hotspot.
This is important to keep in mind. For instance, Verizon’s prepaid plans DO NOT come with access to its ultra-fast 5G network.
But if you go with VISIBLE, its MVNO arm, you do get access to the Ultra Wideband network (and for less money too).
Make sure to read the terms and conditions of the plan you’re considering and make sure that the restrictions will not be a problem for you.
Porting Your Number
If you already have a phone number that you want to keep, you can usually port your number to a prepaid plan. The process is usually pretty fast, but it can take up to several days, and there could be fees as well.
Again, always make sure to check the porting policies for the plan you’re considering and make sure that you’re comfortable with the process before making the switch.
Best Prepaid Phone Plans
And if all of the above sounds good and you understand the PROS and CONS of prepaid phone plans, here’s our pick of the best prepaid phone plans right now.
