Prepaid phone plans are a great way to save money on your phone bill while keeping most of the perks, but you don’t hear about them as often as postpaid plans—the standard pricing model with snazzy branding and bundled extras. For most carriers, prepaid phone plans offer the same benefits to your mobile experience compared to their postpaid counterparts, but they’re not advertised as much. However, it’s worth taking the time to find them, as they might suit your needs better.
So whether you’re looking to pick up a brand new Samsung Galaxy S22, or are eagerly awaiting the release of the Pixel 7, it’s worth taking a look at prepaid phone plans to save money. There are a few important considerations that come with the lower cost, though.
What is a prepaid phone plan?
While the details of prepaid phone plans differ from carrier to carrier, the basic principles remain the same. Prepaid phone plans let you pay your monthly bill before the start of each monthly billing cycle, rather than paying at the end like postpaid. They don’t require a credit check or contract, as you only use the voice, text, and data services you’ve paid for ahead of time.
Let’s use a Verizon line as an example, starting with the standard (postpaid) Unlimited plan. It offers unlimited talk, texts, and data. It doesn’t require a contract, but you will need to get a credit check first. It also requires a $35 activation payment at the time of setup.
This is Verizon’s equivalent prepaid plan. It offers the same unlimited benefits, but at $10 less. Verizon also offers a loyalty discount, which brings the cost down to $55 after 3 months of continuous service, then to $50 after another 6 months.
A $10 difference might not seem a lot initially, but over 36 months that adds up to a saving of $660 when factoring in the discount. The savings and benefits differ from carrier to carrier, but generally, you’ll see a reduction in the monthly bill.
Why does a prepaid phone plan cost less?
While the standard monthly bill for prepaid phone plans is less than their postpaid equivalents, they are often subject to network deprioritization or throttling and include fewer perks. For example, T-Mobile gives postpaid subscribers free Netflix subscriptions, and AT&T offers HBO Max and six months of Google Stadia Pro on its plans. Verizon offers a 6-month subscription to Disney+ with its basic Unlimited postpaid plan, with additional benefits like cloud storage, hardware discounts, and free international talk, text, and data. Deals and discounts can also make postpaid plans a better option.
When a network is particularly busy, carriers prioritize users with postpaid plans, which are more profitable. This is done through data throttling, and data deprioritization. Data throttling means that prepaid users will usually have a lower high-speed data cap than postpaid. For example, a prepaid plan might offer 40GB of high-speed internet before hitting the brakes, compared to 50GB for a postpaid plan. Data deprioritization is when the network is too busy; they will slow down prepaid users first, freeing up the network for others. This means that you may experience patchy connectivity when talking or texting while in a busy area. If you demand HD video streaming, a prepaid plan may not even offer unthrottled streaming as an option.
Carriers also tend to offer better deals for their prepaid plans. For example, at the time of writing, Verizon is offering a free iPhone 13 with any of their postpaid Unlimited plans; no such deal exists for their prepaid plans. Carriers also tend to offer steep discounts for families; the same Verizon Unlimited plan shown above is reduced to $35/line for a family of four.
Prepaid plans and MVNOs
When talking about prepaid plans, it’s worth discussing Mobile Virtual Network Operators (MVNOs). These are carriers which don’t own their own infrastructure, so they rent it from one of the four big carriers (Verizon, T-Mobile, and AT&T). Some examples of MVNOs include Google Fi, Mint Mobile, and Simple Mobile. MVNOs only offer prepaid plans. Because of this, they generally offer fewer bonuses when signing up, and have fewer plans available. You may also be subject to data throttling and data deprioritization as unsurprisingly the big carriers prioritize their own users. Signing up for an MVNO plan often doesn’t require a credit check either. So if you’re exclusively looking for a prepaid phone plan, look into MVNOs. Whereas the big carriers treat prepaid plans as a side business, for MVNOS, it’s usually their only business.
Should you get a prepaid phone plan?
Deciding whether to get a prepaid plan depends on a lot of factors. Even if the monthly cost is less, the additional perks on postpaid plans might result in a better deal overall. If price is the only factor that matters, a prepaid plan will win every time. If you’re still torn between prepaid and postpaid, our roundup of the best value data plans can help you decide.
