Are Prepaid Phone Plans Better Than Postpaid Plans?

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Woman thinking about her phone plan
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Most cellphone plans fall under the postpaid category — you get the bill after you use the service — and prepaid cellphone plans are kind of like the secret menu at In-N-Out Burger.

That doesn’t necessarily mean that prepaid plans are better than postpaid plans, but you can save some money by going the prepaid route.

The downside, of course, is that you don’t get all the perks that come with postpaid plans, like streaming services and cellphone payment plans. Here’s the breakdown of differences between postpaid and prepaid cellphone plans.

Postpaid cellphone plans

Postpaid cellphone plans work just as you’d expect. You pay for your service at the end of the month rather than at the beginning. Cellphone carriers like this method because folks who use postpaid plans generally stay on them for a long time.

Thankfully, carriers sweeten the deal by offering perks reserved for postpaid customers. For example, AT&T gives free HBO Max with its Unlimited Elite postpaid plan; Verizon gives Disney+, ESPN+ and Hulu subscriptions to folks on the Get More Unlimited Plan; and T-Mobile hooks Magenta Plus users with a free Netflix subscription.

Take a look at the most popular cellphone plans to see the kind of perks that push folks over the edge:

Basically, every postpaid unlimited plan comes with some combination of a streaming perk, hotspot data and international calling support.

The best deals are for postpaid cellphone plans only

Along with the streaming perks, postpaid cellphone plans offer killer deals on new cellphones. Almost every cellphone deal you see that mentions “get a free phone” or “buy one phone, get another one for free” requires a postpaid cellphone plan.

Rather than giving the phone to you outright, you enter into an agreement in which your phone will be paid off over two years, but the payments won’t come out of your pocket. Basically, the cellphone company makes the payment for your device until you own it outright.

The catch is that you can’t change carriers prematurely, or you’ll need to pay the remaining balance out of your own pocket. It’s sort of a tricky way that carriers can get you into a cellphone contract without you actually being in a cellphone contract.

The good news is that if you’re not interested in changing carriers, you can have brand-new phones paid off for you. Since you can drop your cellphone carrier whenever you want with a prepaid cellphone plan, carriers won’t offer as many deals.

In fact, right now, all three major carriers are offering a free iPhone 13 if you sign up for a new unlimited postpaid plan or upgrade your existing plan. You have to trade in your old device as well to complete the deal, but you’ll get much more value than you would selling your old iPhone on eBay or something like that.

Check out the iPhone 13 deals available for postpaid customers:

Prepaid cellphone plans

The name of the game with prepaid cellphone plans is getting the lowest possible price for your service.

Since prepaid cellphone plans are stripped of basically all the perks, you typically get a cheaper rate for the essential services. Check out the prices for unlimited plans with prepaid carriers like Ting, Mint Mobile and Reach Mobile:

Needless to say, you won’t find a stand-alone unlimited plan for as cheap as $25 per month with any of the major carriers. These heavily discounted rates are only available through prepaid cellphone plans.

For folks who only care about the essential data, voice and text services, prepaid cellphone plans will get you the best deal.

The downside is that you won’t get much in the way of perks, and since prepaid carriers piggyback on the major wireless networks, it’s possible your data speeds can throttle when the network gets overly congested.

Flexibility to change your cellphone carrier

As a prepaid cellphone user, you gain the liberty to change cellphone carriers basically whenever you feel like it. You can use Mint Mobile for a few months, and then switch over to Tello if they offer you a better deal.

You have the flexibility to jump on deals as they come up with prepaid carriers, or you can always switch to a postpaid carrier without incurring any annoying fees.

What’s best for you?

The difference between postpaid and prepaid cellphone plans basically boils down to what you value most: the cheapest overall price (prepaid plans), or the best overall package (postpaid plans).

If you actually use all the perks with unlimited postpaid plans, then that’s probably a better route overall. But if you just want to pay as little as possible for your cell service, prepaid cellphone plans are where it’s at.

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