Why You Should Consider a Prepaid Cell Phone Plan

An illustration of hands holding smartphones in the air with cash symbols.FUN VECTOR / Shutterstock

There is no reason to pay too much on your phone plan. Prepaid plans cost almost half the price of regular postpaid plans, and they don’t require any contracts or credit checks, so you can go anytime. Reduced costs, freedom and flexibility: these are the reasons for switching to a prepaid operator.

What is the difference?

Prepaid plans charge you at the start of the month for a set amount of conversations, texts, and data. They don’t require a contract or credit check, and there are no overage fees, as you can only use data or minutes you’ve already paid for. You can save a lot of money by paying for a limited amount of data or minutes with a prepaid plan, although most prepaid carriers offer unlimited options at low prices for those who want them.

Traditional “postpaid” plans from AT&T, Sprint, T-Mobile and Verizon are virtually the opposite of prepaid plans. You and the carrier agree to a certain amount of data, chat, or text at the start of the month, but you pay at the end of the month. That’s why postpaid plans require credit checks and charge overage charges. Of course, postpaid carriers have spent the last few years switching to unlimited plans, which are expensive but without overage charges.

Can you feel the gears turning? Prepaid plans don’t have the hassle or postpaid plans of Escrow, and they can save you a lot of money, especially if you’re not using a lot of data, minutes, or texting.

Why is prepaid less expensive?

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Who doesn’t want to save on their phone bill? Prepaid plans with unlimited data tend to cost around $ 40, while limited data (or no data) plans can go as low as $ 15 per month. It’s much cheaper than the postpaid plans offered by Verizon, AT&T, Sprint, and T-Mobile, which hover around $ 60 or $ 70 before taxes and device payments.

But why are unlimited prepaid plans (and prepaid plans in general) so cheap? Well it comes down to performance. Prepaid customers are considered “low priority,” meaning they are the first to experience slow speeds or drop calls in busy areas. Your prepaid carrier may offer slower download speeds than the average postpaid carrier, it may ignore data from LTE access points, or limit all streaming video to 480p. Of course, these things differ between carriers and plans.

Prepaid customers can also experience the limitation (slow speeds) much sooner than postpaid customers. An unlimited postpaid plan can give you 50GB of full-speed wireless internet before slowing things down, while an unlimited prepaid carrier can brake to 30GB (or sooner if you’re on a budget).

Of course, performance isn’t the only thing keeping prepaid costs down. Prepaid carriers don’t offer perks like BOGO phones or free Disney + memberships, which are often factored into postpaid bills. Plus, prepaid carriers rarely ask you to pay activation or service fees, saving you money when you need to change phones or downgrade to a cheaper plan.

There are some situations where postpaid plans cost less. Postpaid carriers tend to offer big discounts to large families, for example. And if you’re not sure what phone you’re using, the benefits of the BOGO phone or free upgrades from a postpaid carrier could save you a ton of money. But generally speaking, prepaid plans are cheaper than postpaid plans due to reduced network performance and lack of benefits.

No commitment, no credit check

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One of the best parts about prepaid plans is that they give you a ton of freedom. There is no contract, so you can change your plan or change providers at any time. And because you pay at the start of the month, you don’t have to worry about being denied a plan based on your credit.

But wait, aren’t most postpaid plans contractless? Postpaid carriers cut contracts years ago, but they still use phone payment plans and early termination fees to trick customers. “Interest-free” device payment plans earn interest if you cancel your service early, and it can be difficult to coordinate an exodus if you share a plan with family or friends.

That said, some people may find it difficult to adjust to the prepaid life. Most prepaid carriers expect you to bring your own device, and if your carrier sells phones, they probably don’t offer financing plans for prepaid customers. You may have to research phones on your own or buy a phone ahead of time if you can’t get a fundraising plan at stores like Best Buy, B&H, or Amazon.

Which prepaid plan should you join?

Now that you’re on an affordable prepaid plan, it’s time to start shopping! There are countless prepaid operators offering great deals, even for families. And since you can activate your phone online, you don’t have to worry about operators having a point of sale near you!

To get you started, here are our favorite prepaid plans:

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