Are Pay-As-You-Go Cell Phones Worth It?
Filed Under: Budgeting
There are a ton of commercials on television advertising the different cell phone companies and their plans for 
consumers. But a paid, monthly contract phone plan may not be the right kind of phone plan for you and your budget. It really depends on your usage and personal preference.
In lieu of a monthly contract phone plan, you have the option to have instead a prepaid cell phone. With the prepaid phones, you are not locked into a 1 or 2 year service plan and do not face having to pay hundreds of dollars in penalties and fees should you choose to switch to a different prepaid phone. The pay-as-you go plan allows you to prepay for the minutes you expect to use on your phone and then the amount of minutes actually used will be deducted from your account. With contract plans you may have the option to rollover those unused minutes but essentially you are paying for the minutes whether you use them or not.
Since many monthly contract phone service provides usually require a credit check before opening a phone account, those with bad or no credit histories may opt to use a prepaid phone instead, which requires no credit check. The pay-as-you-go phone plan can also be a better choice for your budget as you can set the amount of money you can afford to pay each month, instead of facing a high monthly bill you may not be able to pay off each month.
There are several different options available for prepaid phone plans. Citing two examples here, we will discuss the popular TracFone and Net 10 prepaid phones.
TracFone
TracFone boots to be the leader in prepaid wireless service in the US. They offer several value plans, where you can purchase minutes for a flat rate fee each month. Text messaging is available on the phones. You can also add bundles of minutes at any time you are running low. Brand name phones are available starting at $14.99. If you already had a cell phone number, you can transfer your old number to your new TracFone. You can activate and refresh minutes online or via the telephone.
Net 10
The Net 10 prepaid phones charge $.10 a minute for all calls (local, ling distance, and roaming nationwide). The cost of the actual phone ranges from $19.99 to $59.99 and includes many of the popular brand named models (LG, Motorola, Nokia) in a select group of styles. Phones have text messaging capabilities, which cost the sender $.05 per message. Users prepay money to activate and use the phone. Net 10 offers 4 inclusive programs, where users pay a flat-fee to access different amounts of prepaid minutes. You can get 150-400 minutes for a flat rate fee or you can pay for the Net10 Unlimited program that gives you unlimited calling and texting for a flat rate a month. (Note: The Unlimited plan is not available in all areas.) Whenever you need to replenish minutes, you can log on to the Net 10 website or call the toll free number.
If you have been working on your budget and need to find some areas where you can cut costs, compare how many minutes you actually use on your cell phone each month and see if it might be more financially smart to switch to a prepaid wireless plan than it would be to continue renewing your monthly contract with your present provider. Just remember, only make the switch at renewal time or you can expect to pay upwards of $200-$300 to break your contract.
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Prepaid most definitely makes a lot of sense. The US and Canada are so far behind the rest of the world in terms of prepaid adoption, it’s kind of humorous to read about people analyzing whether prepaid is a viable option….heh.
Prepaid is almost always more expensive than paying a monthly plan, if you are someone who uses the phone frequently. I used a prepaid for awhile, and even though I don’t feel like I’m on the phone that often, I was easily spending $40 or $50 a month when I prepaid, which is quite a bit more than my monthly service plan ends up being.
That’s very interesting. I would have thought that the price of the plan (a bucket of minutes I presume), plus e911 fee, plus telco fees, plus sales tax, etc., that you’d be paying more than $40/month. If you’re not using your phone that much, then even one of the prepaid daily plans at $1/day would be $30/month. You’re saying that your postpaid plan, plus all of the associated fees and taxes, that you’re paying less than that…? Even a year ago I would not have thought you could get better value (particularly at the low volume you infer you’re using) on postpaid, but especially now, prepaid is extremely competitive. Anyway, to each their own, but I would be interested in understanding what postpaid plan you had, and what your usage was. Interesting discussion nonetheless!
I have never heard of a post-paid plan costing less than $40 per month. As a matter of fact, I was on the most basic plan with Verizon a while back ($40 for 450 minutes) but I NEVER paid less than 50 bucks per month on it. All those fees and taxes added up! And if I went over my minutes I paid 45cents per minute on overages. Texting added onto that.
Now even if we ignore the fact that there are several unlimited prepaid offers now in the vicinity of $50, up to the 450 minute level you will probably be better off using prepaid. NET10 (one of my favorites) would cost me $45, it always being 10c per minute.
In reality I use far less than 450 minutes per month which means my spending is normally $30 spread over two months or $20 per month. No contract can give me that kind of low per-month rate.