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Choosing Between a Prepaid and Contract Cell Phone Plan

posted by Suzanne Kantra on July 31, 2012 in Family and Parenting, Phones and Mobile, Phone Accessories, Cell Phones, Kids, Guides & Reviews, Money Savers :: 9 comments

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Do you and your spouse have separate cell phone plans? Is your child getting a cell phone for back-to-school this year? If so, you should be looking into the various prepaid and family plan options to find the one that will save you the most money.

There are three main types of cell phone plans: pay-as-you-go, prepaid and postpaid (the typical contract plan). With pay-as-you-go plans, you purchase a bucket of minutes that is drawn against every time you use your phone. Prepaid plans work like regular monthly postpaid plans, but without the commitment and you pay for all usage in advance.

There are reasons to go with each type of plan, depending on how often the members of your household use their phones and how selective they are about the type of phone they carry.

Pay-as-you-go plans

If you’re looking for an emergency-only phone, a pay-as-you-go plan is the perfect option. You purchase a bucket of minutes and then only pay for service on the days that the phone is used. You can pay by the minute or you can get unlimited access for the day. For instance, T-Mobile offers a $3 per day unlimited talk, text and data option that delivers the first 200MB at 4G speeds for Android phones.

Pay special attention to the expiration dates on prepaid cards. High value buckets will last months, even up to a year before expiring. Lower priced buckets expire in as little 30 days, and any unused value will be lost.

You’ll also pay a higher rate than you would with the monthly plan, if you use the phone frequently. For instance, on T-Mobile’s $3 per day plan you’d be paying more than $90 per month, or $20 more than T-Mobile’s 5GB unlimited prepaid plan.

Here’s how the pay-as-you-go plans compare:

Pay-as-you-go Plans

 Carrier Plan Daily Access Fee Per Minute Rate Text Message Rate Data
AT&T $2 Unlimited Calling $2 on days used Unlimited Unlimited $0.01/5kb
AT&T $0.10 per minute Plan None $0.10 $0.20 text/ $0.20 pictures $0.01/5kb
Boost Mobile $2 Daily Unlimited $2 on days used Unlimited Unlimited Unlimited (including smartphones)
Boost Mobile Pay as you go None $0.20 $0.20 text/ $0.25 pictures $0.50
T-Mobile Prepaid $3/day $3 on days used Unlimited Unlimited Unlimited 4G for 200MB then throttled
T-Mobile Prepaid $2/day $2 on days used Unlimited Unlimited Unlimited 2G
T-Mobile Prepaid $1/day $1 on days used $0.10-$0.33 Unlimited None
Verizon $1.99 Daily Plan $1.99 on days used Unlimited $0.02 text/ $0.25 pictures $0.99 per day
Verizon $0.99 Daily Plan $0.99 on days used $0.10 $0.10 text/ $0.25 pictures $0.99 per day
Verizon Pay as you go None $0.25 $0.20 text/ $0.25 pictures $0.99 per day

 

Prepaid plans

For those that don’t like to be tied to a contract or want to be surprised by a chatty teen at the end of the month, a prepaid plan is a good fit. There are plans that range from Tracfone’s talk-only $9.99-per-month 50-minute plan to MetroPCS’s $50 unlimited talk, text and 4G LTE data for Android smartphones. There’s really something for every budget—and you’ll save over a postpaid plan.

You will even find a few great prepaid smartphone options in the iPhone 4S and HTC One V, though most of the latest phones aren’t available for prepaid plans. No Samsung Galaxy S III or HTC One X, for instance.

Before purchasing a prepaid phone for a child, consider whether you’ll want to use the carrier’s parental controls—something not available for prepaid plans. You can use parental-control apps for Android devices, but not for regular cell phones. And if you go with a MetroPCS or another smaller prepaid carrier, check the coverage map to make sure there’s ample coverage wherever you and your family will use your phones.

Here are the best options under $30 and $60 for the major prepaid and national carriers: 

Prepaid Plans

 Carrier Plan Per Minute Rate Text Message Rate Data Total without Data Total with Data
AT&T $50 Monthly unlimited plan Unlimited Unlimited Unlimited for regular phones, smartphones require separate data plan: $25 for 1GB, $15 for 200MB or $5 for 50 MB $50 $50 regular phone/ $55 smartphone
AT&T $25 Monthly Plan calls over 250 minutes are $0.10 Unlimited $0.01/5kb; can purchase data plan: $25 for 1GB, $15 for 200MB or $5 for 50 MB $25 per month $25 regular phone/ $30 smartphone
Boost Mobile Android Monthly Unlimited Unlimited Unlimited Unlimited for smartphones   $55
Boost Mobile Monthly Unlimited Unlimited Unlimited Unlimited for regular phones   $50
Boost Mobile Talk & Text Unlimited Unlimited Unlimited None $45  
Cricket PAYGo $55 Plan calls over 1000 minutes $0.05 per minute Unlimited Unlimited: 3G for first 2GB then throttled   $55
Cricket PAYGo $25 Plan calls over 300 minutes $0.05 per minute Unlimited Unlimited for regular phones   $25
T-Mobile $60/month Unlimited Unlimited Unlimited: 4G for first 2GB then throttled   $60
T-Mobile $30/month Calls over 100 minutes start at $0.30 Unlimited Unlimited: 4G for first 5GB then throttled    $30
Tracfone 50 Value Plan Calls over 50 minutes start at $0.10 per minute Start at $0.05 per text/pictures start at $0.50 None  $9.99  
Verizon Prepaid $50 Unlimited Unlimited Unlimited Unlimited for regular phones    $50
Virgin Mobile Beyond Talk $55/month Unlimited Unlimited Unlimited for smartphones   $55
Virgin Mobile PayLo $30 Calls over 1500 minutes cost $0.10 per minute Texts over 1500 cost $0.15 per text/$0.25 per picture 30MB   $30

 

Family plans

If you want the latest smartphones, a postpaid family plan is the way to go. Plus, these plans come with the option of carrier-based parental controls, like location tracking and driving controls, which can be helpful to parents with older children, and content filtering, talk and texting caps and time-of-day restrictions for younger kids.

Here’s how the four major carriers stack up:

Family Plans

  Carrier Plan type Minutes per line Messages per line Data per line Monthly Fee for 2 lines
with equal text and data
AT&T Talk, Text & Data 550 Unlimited 3GB $169.98
  Talk & Text 550 Unlimited none $109.98
  Talk 550 none none $69.98
Sprint Talk, Text & Data 1500 unlimited unlimited $129.99
  Talk & Text 1500 unlimited none $99.99
  Talk 700 none none $69.99
T-Mobile Talk, Text & Data 1000 unlimited 2GB $139.99
  Talk & Text 1000 unlimited none $79.99
  Talk 1000 none none $59.99
Verizon Talk, Text & Data unlimited unlimited 2GB $140.00
  Talk & Text unlimited unlimited none $70.00

 

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Discussion loading

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How unlock Sprint purchased phone

From Landry on July 31, 2012 :: 11:52 am

My question is how to unlock the phone I purchased from Sprint and then take that phone to one of the other carriers for no contract service?  I saw someone on here saying you could take ANY phone now and get it unlocked and purchase a $15 sim card and Voila!I want to get away from Sprint so bad. Anyone? Feel free to email me .(JavaScript must be enabled to view this email address)

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Cell Phone service

From Joe on July 31, 2012 :: 4:30 pm

I don’t understand why no one ever talks about Consumer Cellular. They are thru AARP you don’t have to belong to them.But if you do you can save 10% on your bill. You have to purchase the phone. Then you pick a plan of Min no contract so if you don’t like it you can just stop. I have a smart phone from them I have 300 min 500 text messages and 10 MB of data, my phone has wi-fi so if I am around wi-fi i don’t pay for data and my bill is under $40.00. So I am very happy with them. I have had them for about 4 years. All there support people are in the USA so you can understand them….. Also if you knew me and you join and tell them I sent you we would both get $10.00 off our first bill.. Just wanted my 2 cents in Thanks

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You Missed StraightTalk Service

From Donna Parcel on July 31, 2012 :: 5:14 pm

I have had a Straight Talk phone (A joint effort of TracFone and Walmart) For $30. a month you get 1000 minutes and 1000 text messages and 30 Mb of Web access or if your need more for $45. a month you get unlimited talk minutes, unlimited text, and unlimited Web access.  I’ve had very few problems with them and you always know when you need to purchase more service.  Also for the unlimited you can buy three months for $125 saving $10. over three months individual purchases.

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Unlock your phone

From Tiffany on July 31, 2012 :: 5:20 pm

From my understanding once your contract is up you can ask your carrier to unlock your phone for you. I believe that there is no fee for this.

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Coverage is everything....

From Lisa Lind on July 31, 2012 :: 9:30 pm

I am not disagreeing with anything stated here but if you travel AT ALL you need to think about coverage. We have been fulltiming in an RV for almost 3 years and by far the best coverage we have found is with Verizon. Do we then have the most inexpensive plan? Nope but at least I know that 95% of the time, no matter where I go, I will have cell, and internet, service. I would rather do away with Verizon but I find that we simply can’t….

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Overseas Unlock

From Rebecca on March 24, 2013 :: 6:59 pm

If I purchase a phone, and a plan to use for 30 days in the US, can I have the phone unlocked to use when I return to my residence in Australia?

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May vary by carrier

From Josh Kirschner on March 25, 2013 :: 9:14 am

The answer to that may vary by carrier and the type of plan you purchase (and the rules keep changing). The best thing to do is confirm with the carrier prior to purchasing the phone.

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T-Mobile Bargain

From Rocky on March 24, 2013 :: 11:23 pm

If you just plan to use your cell phone for emergencies or to get directions and make reservations while on the road (but not to gossip), get an inexpensive T-Mobile phone and a $100 prepaid card (good for 1,000 minutes over one year). Thereafter, you can carryover unused minutes indefinitely as long as you add at least $10 worth of minutes each year (smallest denomination prepaid card). Over several years and light usage, you will save yourself quite a bit of money over regular plans. After a couple of years of being a T-Mobile customer, their customer service person showed me how to unlock my cell phone in case I wanted to use it in Canada with a Canadian SIM card. I decided that getting a Canadian SIM card wasn’t worth it, only used the phone a few minutes on my trip and paid the higher Canadian cost (about 60 cents per minute including roaming).

The cost per minute is much higher with a $10 card than with a $100 card. But $10 a year to maintain your account is a real bargain.

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better deal

From Elizabeth on May 14, 2013 :: 2:46 am

The best deal I found was vitel wireless.  $35 a month, unlimited everything.

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