What will save you money: a pre-paid cellphone plan or a 1- to 2-year contract?


Two months ago, I moved into a new apartment and needed to cut the fat in my spending. Where did I trim first? The landline.

I know, I know, after discussing the benefits of the landline in a post earlier this year, one would think I'd never do away with it. Maybe I'll reconsider later on, but for now, saving an extra $30 a month is worth it.

Where I am NOT saving, I discovered, is in my cellphone use. My monthly bill skyrocketed as soon as I got rid of the landline since I now use it to conduct interviews and of course, there's the occasional one-hour wait for customer service to handle whatever gadget, credit card or travel-related problem I am having that week. Please note that I have a BlackBerry and so I also pay for Internet use.

My roommate chose a pre-paid phone plan since she's only staying in the U.S. for half a year and when I found out she was paying $50 for her unlimited calling, texting and data monthly plan, I got jealous.

"There must be a catch," I thought. "How could a pre-paid service be cheaper than a monthly, contract-based service? I thought I was getting a deal!"

So when the opportunity arrived, I did some research and discovered some shocking information.