Prepaid Plans versus Contracts

Mobile phone service is provided by a number of large cell providers on either prepaid or contractual bases. If you want to choose a cellular phone service, whether contractual or prepaid plan, it’s important to consider a service that will conform to your personal cell phone usage.

Prepaid plans have become the norm and more people are finding that there are many advantages with this phone service that outweighs its disadvantages. Unlike a contractual phone service plan, a prepaid plan is more flexible and can potentially help the user to save a lot of cash.

Prepaid Plan

Prepaid plans do not involve a monthly contract. Instead, the service provider requires the users to prepay a number of minutes they will use per month on their phone. These minutes will be available for use until they are exhausted or expired, at which point the phone user can purchase more time. Typically these minutes can expire between one and three months after purchasing them.

The price per minute for prepaid is more expensive compared to the contractual plan. Managing a prepaid plan can sometime be difficult since the user may find it hard to track of his/her budget — the prepaid time can run out when they have limited cash.

However, prepaid phone service is a smart choice for people who rarely communicate using their cellular device. Since the service does not depend on a monthly rate, the user can spend as little or as much as their budget allows. Prepaid service can help parents to control the cell phone bills for their children by setting the phone usage constraints. This service is ideal for people with poor credit or lack of credit because the service does not require the users to undergo credit checks.

Most mobile phone service providers offer prepaid service while others allow the phone users to use the pay-as–you-go service, which means that the users are billed for the minutes they use in addition to a small service fee.

Contractual plan

This type of plan involves long-term contracts, deposits and credit checks that are executed at the initial stage. This makes a contractual plan more of a commitment compared to prepaid plan. This plan has a termination fees and the phones are less expensive. Sometimes they are offered as incentives when the user signs the contract.

Unlike the prepaid plans, contractual service has a variety of features that can include road assistance plans, family plans and countrywide long distance calling. Family plans allow the family members to share a pool of minutes and this may involve an additional small cost for adding a line to another member of the family.

Other features available on a contractual plan are text messaging and internet access. Text messages are charged at a flat fee every month while the cost of internet depends on the quantity of data downloaded.

Before you decide to go for prepaid or contractual plan, you need to evaluate your talking habits. It is important to consider if you will be calling during the weekends, nights and how many in-networks calls you will make. Your recently phone statements will help you to make an informed decision.