There’s no reason to overpay on your phone plan. Prepaid plans cost nearly half the price of typical postpaid plans, and they don’t require any contracts or credit checks, so you can leave at any time. Lower costs, freedom, and flexibility: These are the reasons to switch over to a prepaid carrier.
What’s the Difference?
Prepaid plans charge you at the beginning of the month for a set amount of talk, text, 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 that you’ve already paid for. You can save a lot of money paying for a limited amount of data or minutes with a prepaid plan, although most prepaid carriers offer low-cost unlimited options for those who want it.
Traditional “postpaid” plans from AT&T, Sprint, T-Mobile, and Verizon are practically the opposite of prepaid plans. You and the carrier agree on a certain amount of data, talk, or text at the beginning of the month, but you pay at the end of the month. That’s why postpaid plans require credit checks and enforce overage fees. Of course, postpaid carriers have spent the last few years pivoting to unlimited plans, which are expensive but free from overage fees.
Can you feel the gears turning? Prepaid plans don’t have the hassle or commitment postpaid plans, and they can save you a ton of money, especially if you don’t use a lot of data, minutes, or texts.
Why Does Prepaid Cost Less?
Who doesn’t want to save money 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 a month. That’s way 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 that they’re the first to run into slow speeds or dropped calls in busy areas. Your prepaid carrier may offer slower download speeds than the average postpaid carrier, they may skip out on LTE hotspot data, or cap all streaming video at 480p. Of course, these things differ between carriers and plans.
Prepaid customers can also experience throttling (slowed speeds) a lot sooner than postpaid customers. An unlimited postpaid plan may give you 50GB of full-speed wireless internet before slowing things down, while an unlimited prepaid carrier might hit the brakes at 30GB (or sooner if you’re on a budget plan).
Of course, performance isn’t the only thing keeping prepaid costs down. Prepaid carriers don’t offer perks like BOGO phones or free Disney+ subscriptions, 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 switch phones or change to a cheaper plan.
There are some situations where postpaid plans cost less. Postpaid carriers tend to offer steep discounts for large families, for example. And if you aren’t particular about which phone you use, the BOGO phone perks or free upgrades offered by a postpaid carrier could save you a ton of money. But generally speaking, prepaid plans are cheaper than postpaid because of reduced network performance and a lack of perks.
No Commitments, No Credit Check
One of the best parts of prepaid plans is that they give you a ton of freedom. There are no contracts, so you can alter your plan or switch to a new carrier at any time. And because you pay at the beginning 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 contract-free? Postpaid carriers phased out contracts years ago, but they still use phone payment plans and early termination fees to trap customers. “Interest free” device payment plans accumulate 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 on the off-chance that your carrier sells phones, they probably don’t offer financing plans to prepaid customers. You may need to research phones on your own or buy a phone upfront if you can’t score a financing plan from stores like Best Buy, B&H, or Amazon.
Which Prepaid Plan Should You Join?
Now that you’re set on an affordable prepaid plan, it’s time to start shopping! There are countless prepaid carriers offering killer deals, even for families. And because you can activate your phone online, you don’t need to worry about which carriers have a retail location near your home!
To help you get started, here are our favorite prepaid plans:
This post was written by Andrew Heinzman and was first posted to www.reviewgeek.com
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