When to Switch to a Prepaid Cellphone

Almost everyone I know has a cell phone. And many of them are paying quite a bit for these cell phones. However, they could be saving money if they decided to get a prepaid phone, instead of signing a contract and paying a monthly fee (and possibly being charged for overages). My husband and I use prepaid cell phones, and it saves us quite a bit each month. But, prepaid cell phones aren’t for everyone, though.

prepaid cellphone

Who Benefits Most from Prepaid Cell Phone Plans

Those who benefit the most from prepaid cell phone plans are likely to be those who don’t use their cell phones all that much. Additionally, it helps if your family cell phone needs are fairly small. (No matter how many eight-year-olds have cell phones now, I don’t see much of a reason for my son to carry one about.) You should also not be very fussy about getting a smart phone if you go prepaid.

In my family, cell phones do not represent the primary communication. We have VoIP for our regular phone, and the cell phones are mainly for when we’re away. My cell phone is a pre-paid, per-minute deal. I rarely need to use my phone, so my per-month cost averages out to right around $4 month. And I like having the phone in case of emergency, or so my husband can reach me when I am not at home.

My husband, though, has a prepaid monthly plan, costing $40 a month for unlimited talk and text. But, since there are no contracts, we can stop as soon as he’s done with his degree and we’re ready to move on. (This is the phone number my husband gives to students, since the university didn’t give him an office, but still expects him to teach, and to be somewhere on campus during the day.) A per-minute plan was costing close to $70 a month for the amount of talking he did with distance students for a broadcast class, so we switched. This plan works well for us, and it keeps us from being locked into contracts.

Prepaid cell phones work best for those whose cell requirements are basic, and for those who do not use their cell phones for more than occasional calls.

When a Prepaid Phone Won’t Work for You

Of course, a prepaid cell phone isn’t the answer for everyone. For those who want data packages, who use the cell phone as the primary phone, and who want smart phones, or need multiple phone lines for larger families, prepaid phones can start to get expensive. The cost efficiency starts to go down if you have to keep reloading minutes, or if a basic prepaid monthly plan doesn’t fit your needs.

Bottom Line

You need to do your research before deciding which cell phone to buy. Prepaid cell phones now come with a variety of options, including data packages and family plans. This can provide you with a viable alternative to some of the other cell phone plans out there. However, you should perform a realistic analysis of your cell phone needs, and compare the cost of prepaid with some other plan. Also factor in the type of phone you want, and whether you are willing to commit to a two-year contract. For heavy users that want a lot of extras, a prepaid cell phone might not be the way to go.

Photo by adriagarcia.


By , on Apr 25, 2013
Miranda Marquit Miranda is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds.


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