Cell Phone Plans: Should You Go PrePaid or Contract?

The Great Cell Phone Plan Debate:

How To Decide Between A Contract Wireless Plan or Prepaid Card

Prepaid cellphone plans are quite flexible and can potentially save you lots of headaches as well as tons of cash— so how come the majority of people who use cellphones still insist on signing a contract? Below we’ll take a look at the pros and cons of contract vs. prepaid wireless cellphone plans.

If you’re tired of being tied down to a two-year commitment, it may be time to rethink why you’re still hanging onto that expensive ball and chain. Below, we’ll take a look at what benefits you may enjoy from a prepaid plan over a contract, then we’ll examine the prepaid vs. contract cellphone plans for several of the U.S. carriers to give you a better idea of whether or not you might benefit from ditching your contract and going prepaid.

Prepaid vs. Contract: The Pros & Cons

In many countries, you can go to your local convenience store, buy a prepaid SIM for relatively cheap, and you’re ready to make calls in minutes with no contract. The downside? Often you’ll need your own phone. With a contract, carriers often subsidize the retail value of a phone in exchange for a fixed commitment from the customer. You’re basically paying for the discount. So what’s the real price you’re paying for that two-year contract, as opposed to going prepaid?

Examine Your Habits

Before you make any decision about going contract or going prepaid, you need to know your talking habits well. There are a variety of prepaid options: You can pay for X number of minutes, or you can pay by the day that you need access. Things to consider include how much in-network calling you do, and whether you call during nights and weekends. So, look at your recent phone statements, and look at them well.

The Money & Phone Issue

You’ve got several reasons to consider prepaid. If you suspect that what you pay in contract is more expensive than what you could pay prepaid, looking into this option is a valid alternative. (You might also want to try BillShrink to see other ways to cut down on your phone service.) Even if you’re currently out of contract, but your talking and data needs have changed, changing your plan will often obligate you to commit to a new contract for another two years, regardless of what provider you use. For the commitment-phobic, early phone adopters, or constant phone switchers, contracts can be huge detriments.

Keeping Your Number

While contract plans can seem like the adult grown-up version to the prepaid equivalent, this option isn’t just an alternative for unwieldy teenagers. The major carriers will allow you to port your existing number to prepaid plans, and if you’re already using a Google Voice number to manage your existing numbers you won’t have to change a thing to get started.

So What’s The Point?

At the end of the day, the point isn’t just to save more money (even though that’s often a big factor). It’s about not being tied to a particular carrier or phone for two years just because you signed a contract, or just so you could save a little money up front on a phone you’ll want to replace in less than two years, anyway. With prepaid, contract-free plans, you can focus on what should matter most: ‘The quality of coverage and service a carrier provides.’

Details about specific wireless companies for comparisons and the rest of this article can be found here on LIFEHACKER.

Send an email to Erica Ho, the author of this post, at erica@lifehacker.com.