Pay as You Go vs. Prepaid Cell Phone Plans: Which is Best for You?


Prepaid cell phones

Once thought of as an expensive option, because the per minute rates can seem much higher, many cell phone users are now seeing the value of pay as you go and prepaid cell phone plans. The move by customers away from traditional monthly plans, has made cell phone companies that used to only offer monthly service plans with high rates and lengthy contracts, take notice and develop prepaid and pay as you go plans to bring customers back. And these plans are well worth considering as a way to save money.

Are Prepaid and Pay as You Go Plans the Best Cell Phone Plan for You?

Before opting for one of these plans, you need to take a close look at your regular cell phone usage to determine if one of these plans will truly save you money. If you regularly use your cell phone for work or instead of a landline, then a prepaid plan would probably be an expensive option for you. This is because the per minute rates can range from 10 to 25 cents a minute. However if you rarely use your cell phone, (less than 500 minutes a month) then you should take a second look at your current bill and start researching if prepaid is the way to go.

Comparing Prepaid and Pay as You Go Cell Phone Plans

To get the best deal and the most savings for you, you'll need to find several plans and compare what each plan offers to your current cell phone use. At first glance, making a comparison and decision about which plan and cell phone carrier to choose is like comparing apples to oranges. The great differences in plan terms, conditions, and payment options will make it difficult. To make a good choice based on what will save you the most money, you will need to know exactly how many minutes a month you use your phone, who you call, and at what time of day you call. Some Prepaid cell phoneplans are a straight per minute plan. For example, with one plan you may pay $100 for 1000 minutes. When your minutes run out you refill your phone plan. Other plans may charge you a fee only on the days you use your phone, with different per minutes rates for different types of phone calls (in network member, day or night calls etc.).

To save money you will have to pick the best cell phone plan for you, which may not be the same plan your friend or neighbor saved money with. Look at your cell phone usage over the last three to six months. Calculate how many minutes you use on average each month, when those calls were made, how many days you made phone calls in that month, and how many texts you sent and received. Then look at each cell phone plan and plug in the numbers for one month so see which plan would cost you the least.

For example, if you use an average of 100 minutes and make calls about 15 days a month, a plan of $2 a day with unlimited minutes for that day would cost you $30 a month. By comparison, a plan of $100 for 1000 minutes (or 10 cents a minute) would cost you $10 a month. That is a difference of over $200 a year. Doing this research will take time, but if you choose the right plan for you the savings can be significant and well worth it.

The Prepaid Phones

For many the idea of a prepaid phone makes one think of a large and clunky out of date cell phone that does not even have a camera, let alone texting or internet capabilities. Although such phones are still available at your local retails store, the cell phones available with a major cell phone companies for prepaid plans are just as good as a "regular" cell phone, with a camera, texting, and internet capability. Do expect to have to purchase the phone you want however. Prices will vary. There are cheap cell phones available starting around $10, which will get you the clunky out-of-date phone without a camera. Alternatively, you can opt for latest and newest cell phone model that will cost much more but have the features you need. Free phones are uncommon with these prepaid plans.

Keeping Your Cell Phone Number

What may also have kept many away from prepaid phones is that you couldn't keep your cell phone number. That has changed, with many plans you can keep your cell phone number. Ask the cell phone carrier representative about your options.

Read the Fine print

The pay as you go and prepaid cell phone plans, just as with any cell phone plan, are heavy on the fine print. Often the minutes are a "use it or lose it" plan with an expiration date. You may pay extra for texts, and different rates for sending texts than for receiving tests. Sending photos or videos and accessing the internet will cost you extra. If you don't read and understand the terms and conditions of your plan, then you may be hit with a large unexpected bill. Do read all the fine print and ask questions if anything is unclear before signing on the dotted line.

Choosing a prepaid or pay as you go cell phone plan that will benefit your budget is time consuming and can seem too complicated to bother. However, consider the following; the least expensive traditional monthly cell phone plans run about $40 a month. If you only use 100 minutes a month, you are paying 40 cents a minute and $480 a year to keep your cell phone. A pay as you go cell phone plan at 10 cents a minute would cost you $10 a month and $120 a year. For those light cell phone users, it makes sense to take a closer look at these prepaid cell phone plans to improve your personal finances.