5 Key Differences Between Prepaid and Postpaid Cellphone Plans

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Woman comparing two phones or cellphone plans
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There are two different types of cellphone plans: prepaid cellphone plans and postpaid cellphone plans.

The main difference between these two types of cellphone plans boils down to when you pay your bill, but there are other factors that differentiate your two options.

Let’s run through the big differences between prepaid and postpaid cellphone plans.

When you pay your cellphone bill

Starting off with the most obvious difference, prepaid cellphone plans and postpaid cellphone plans require you to pay your bill at different times. Prepaid plans function as a pay-as-you-go option, in which you pay in advance for the cellphone plan you want to use for the next month.

Prepaid plans offer more flexibility than postpaid plans because you can change your cellphone plan (or even your carrier) from month to month.

Postpaid plans have you paying for your cellphone bill at the end of the month, and you’re charged the same amount regardless of how much data you used.

It’s kind of like the difference between being paid a salary and being paid by the hour. Your salary will be the same amount of money at the end of the year, whereas a paid-by-the-hour situation can either have you making less money than a salary, or considerably more.

Likewise, if you plan accordingly, you can potentially save more money by going with a prepaid cellphone plan.

Eligible cellphone plans

It would be nice if we could pick and choose any cellphone plan and decide how we want to pay our bill, but cellphone plans won’t let us do that.

When you sign up for a cellphone plan, you’ll agree to pay with either a prepaid or postpaid option. There are plenty of wireless carriers (like Mint Mobile for example) that only offer prepaid plans, but all of the major carriers (like T-Mobile, AT&T and Verizon) offer both prepaid and postpaid cellphone plan options.

To give you an idea of the difference between postpaid and prepaid cellphone plan offerings, here’s a list of the most popular plans for each type of payment option:

Most popular prepaid cellphone plans

Most popular postpaid cellphone plans

You’ll notice a difference between the types of carriers that offer prepaid cellphone plans and postpaid cellphone plans, along with the associated prices.

You’ve got the big carriers offering postpaid cellphone plans for relatively high prices, and you’ve got smaller carriers offering prepaid plans for comparatively cheaper rates. This pattern holds true in most cases between the big postpaid carriers and smaller prepaid carriers.

Priority data speeds and perks

In most cases, prepaid cellphone plans won’t experience the same data speeds as postpaid plans. Smaller carriers don’t own wireless networks, so they need to piggyback on the major networks offered by AT&T, T-Mobile and Verizon. For that reason, prepaid users regularly experience data throttling as priority data is given to postpaid customers from the major networks.

Imagine that you and a friend are visiting a crowded convention. You have a prepaid cellphone plan and your friend has an AT&T unlimited plan. You might find that you have a much harder time refreshing your Twitter feed or uploading a picture to Instagram compared with your friend.

Your data speeds slow down to give your friend the faster data speeds, which can certainly get annoying. That’s the tradeoff you make when you opt for a cheaper prepaid cellphone plan.

Along with potentially lower data speeds, prepaid users don’t qualify for the same awesome perks that postpaid users do. Compare T-Mobile’s Simply Prepaid Unlimited plan and Essentials Unlimited plan:

The Essentials plan comes with HD-quality streaming, offers coverage in Mexico and Canada and qualifies for a sweet cellphone deal.

You won’t find any such perks with the prepaid cellphone plan, but you will pay $10 per month less for the service.

In some cases, losing out on the perks won’t justify the monthly discount, and in other situations, it will. You’ll just need to decide what you care more about.

Cellphone payment plans

If you want to bundle your cellphone plan with your cellphone payment, you’ll need to choose a postpaid cellphone plan. Since there are no contracts with prepaid plans, you can’t agree to pay off anything over time.

Basically, every cellphone deal depends on you signing up for a postpaid cellphone plan, so you can pay for your device over time and receive a discount. If you plan on sticking to prepaid cellphone plans, you’ll need to get used to the idea of paying full price for a new cellphone.

No credit checks with prepaid cellphone plans

You don’t have to worry about qualifying for a credit check with a prepaid cellphone plan. Those of you who happen to have low credit scores won’t need to stress about signing up for a prepaid cellphone plan.

Speaking of stress, you won’t need to worry about overage fees with a prepaid cellphone plan either.

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