I’m just about to buy a new mobile phone and I don’t know if I should get my phone on a plan or on prepaid, which is better and cheaper? Can you offer up some advice, please?
I’ve been puzzling about this myself, actually, so you ask your question about cell phone plans at a good time. As with any decision, there are pros and cons for both choices, so let me outline some of my thinking.
Prepaid Cell Phone Plans
As you know, prepaid is also known as “pay as you go” because you pay for the time you’ll use in advance of using it. This is great because it ensures that you’ll never get a surprise cell phone bill at the end of the month and is ideal for people on a tight budget. You just pay, say, $25 and then get however many minutes are covered by that amount. If you’re at $0.25/minute, the math’s easy: that’s 100 minutes per month.
When my children are old enough to start using cellphones I’m sure that we’ll get them prepaid plans so we can just tie it down to a minimum charge and once that’s used up, well, then their phone is dead useless until the next month when it’s recharged.
Every cellular provider I know about has prepaid or pay-as-you-go plans available that include either free or very low cost telephone handsets too, indeed, even companies like Target offer prepaid phone packages from Virgin Mobile and similar. With a lack of termination fees, no long-term obligation to keep the phone or service, a free phone and prepaid minutes, it’s an excellent choice for many people.
Keep in mind, however, that incoming calls chew up minutes the same way that outgoing calls do, which is quite unlike a regular land line where you pay to originate the call, not to receive it. Forgetting about this can easily consume your entire monthly allocation before you’ve even figured out how to dial!
Monthly Cell Phone Contracts
Most cellular carriers actually prefer that you sign a contract and they usually offer substantial discounts on popular cellphones like the Motorola RAZR to get you to commit to a twelve or twenty-four month contract. A phone that might cost $300-$400 can often be purchased for under $100 with a two year contract agreement, for example.
There are a number of benefits to a contract, including lower per-minute fees and the option of adding various additional services (like three-way calling) to your basic plan. Since you pay after-the-fact for a given month, you can also use your mobile phone as frequently as you’d like without running out of minutes. This doesn’t prevent you from being shocked by a huge bill, however, and I have certainly heard stories of people who ended up with $500-$1000 or more on a monthly bill because they didn’t pay attention to minutes, called long distance to chat with a loved one, or similar.
Another advantage of contract service is that you’re more likely to get three features that I think are invaluable for a cellphone: free roaming, free long distance and free “in plan” or “circle of friends” calling. The first two mean that you can take your phone with you as you travel on business or pleasure and that you can make calls from anywhere to anywhere (typically only in the United States) at the same rate. For many people calling long distance on their cellphone while in their house is substantially cheaper than that same call on a regular “land line.”
The circle of friends or “in plan” programs can be a great boon too. If you find that you spend a lot of time talking on the phone with one or two people (perhaps your spouse and child) then these programs will let you communicate without charge and without the call time being subtracted from your monthly allocation. Nice!
The disadvantages of a contract are that you’re locked into a set plan and provider (though many providers can switch your plan if you call and ask them) and that if you do want to upgrade your phone you’ll find that there can be quite substantial penalties for doing so. That $300 you saved on the phone by signing a two year contract can suddenly turn into a $300 early cancellation fee.
Some of the important questions to ask (compliments of PC World Australia) include:
- Are there free calls to phones on the same network?
- Are there “free time” options?
- What is the choice of plans?
- Are there talk and/or text packages?
- What are the Internet/home phone/mobile phone bundles?
- What are the global roaming agreements?
- What are the service and warranty agreements?
- What are the penalties for breaking a contract?
- How do I transfer an existing mobile number?
- What is the coverage area?
Hope that helps you make a smart decision with your cell phone.
I have a pay as you go phone from Walmart (found out i can put the sim card in my iphone cause they are both Telus mobility plabs but its 30 cents a minute and if i use the wi-fi its 25 cents per click/download. Its costing me around $120/month, I use about 400 minutes and never use the wifi cause it would eat my minutes.
I had a plan with Telus but they ripped me off and i didn’t pay the bill so my credit with Telus is poor, when i called they found out i had two accounts and won’t upgrade me unless i pay the old bill. I’m trying to upgrade to a better pay as you go or prepaid plan (and there are some great ones out there) but do you know of any that i can use with my iphone (I cannot get it unlocked, it only works with the telus sim cards) and one that does not require a credit check or great credit? Thanks alot, I’m in Burlington Ontario btw.
I have done so much work and research on different cell phone plans that are available and have come to realize that prepaid is completely the way to go . You aren’t stuck in some contract where they have complete control of what they charge you… and you get these fees and you’re like WHAT ARE THESE!! With prepaid, at least you have a are able to control what you actually pay for. I have a net10 phone and the service is fabulous and I have saved SO much money. Ten cents a minute and TONS OF INTERNATIONAL calling to over 60 destinations for just 15 cents a minute.. pay for what you actually not use.
Prepaid phones have been really wonderful for me. Specifically Net10. You get 300 minutes when you get your phone. And the service is great! When your minutes expire they remind you and you never get in a bind. I pay only ten cents a minute which is a huge bargain. I can’t imagine spending more than thirty dollars a month for a cellphone and texting! It’s ridiculous in times like these to be abused by cellphone companies that are constantly charging you for cancellation fees and just taking all your money! Talking is talking.. its all the same… I just prefer to save tons of money.
Can a pay-as-you-go phone be used on a compatible contracted cell line?
What a wonderful website! I use the prepaid cell plan, Straight Talk, and it has already saved me wonders. With the research I’ve done, I will be saving over $500 a year as opposed to a monthly contract. Talk about a great deal! Plus it’s on the Verizon network so I get awesome coverage 🙂
Hi, My phone doesnt let me make any calls, all it shows initial programming needed, how can I take that off? It wont take my code!
I really want to get a prepaid phone. I have 2 main priorities that I would really like to have.
1. I want the phone to be a Motorola Razr(i don’t care if it’s a V3, a V3xx, or what ever)
2.I want the plan to be a prepaid plan. The thing is, I don’t know which prepaid plan is the best that still offers the razr with the plan.
Will someone please help me out with my dilmea!!!???????? My old phone is dying like there is no tomorrow and I need a new one VERY SOON!!!!! HELP!!!!
Very informative article. I have tried every cell carrier and plan imaginable and now use prepaid with net10. Your surprise bill comment is precisely why I’m using prepaid. I’ve had too many scary surprises to last a lifetime. Net10 has great customer service and my calls don’t drop or sound like they’re out of a sci-fi movie.
Keep up the great writing!
If I buy a verizon wireless pay as you go phone from say walmart. Can I switch this phone onto my regular contract service? The pay as you go Razor at walmart is $120.00 the same phone at verizon without contract is $220.00 would like to uy from walmart and use it on my contract plan.
Thanks,
Jason
if your son has a disposable prepaid phone and you pay cash it wont be traced to you. but using a phone with a plan for something illegal will certainly be traced.
Are there any liabilities for letting someone use your cell phone? Can I get in trouble if my son’e friend uses his phone for something illegal?
please find me a free razor phone with prepaid minutes.
I just purchased a Razor phone, and I’m trying to set it up so I can e-mail pictures from my phone. I set-up a free account with g-mail. I tried a couple of times but for some reason I can’t e-mail pics from my phone. I even tried sending just one. Cingular told me to get with G-Mail because according to them all of my settings are correct for e-mail.
I just purchased a Razor phone, and I’m trying to set it up so I can e-mail pictures from my phone. I set-up a free account with g-mail. I tried a couple of times but for some reason I can’t e-mails pics from my phone. I even tried sending just one. Cingular told me to get with G-Mail because according to them all of my settings are correct for e-mail.
Another HUGE part of this equation is how much you plan to use your cell phone. Figure out what you realistically need. I made a conscious decision to keep my cell phone usage to a minimum. I only use it for emergencies, meeting up with people, or very quick calls to home to let someone know where I’m at or get a quick question answered. My cell number is handed out only to a very select group of people and they all know not to call my cell just to chat. By not using my cell phone for lengthy conversations or as a replacement of my land line, I was able to get on a *very* cheap prepaid plan from Virgin Mobile.
The default minimum to maintain the plan is $20 every 90 days. By setting up an autopay option, I was able to get that default down to $15 every 90 days ($5/mo.). At 18¢/min., that gives me ~28 min./mo (I never use that many minutes). Unused minutes roll over, so if I ever have a month where I need to use more than the 28 min., it’s good to know I have them.