Making the Call on Prepaid Cell Phones -- Savings Experiment

Making the Call on Prepaid Cell Phones
Making the Call on Prepaid Cell Phones

Buying a new cell phone or upgrading your existing one usually binds you to an expensive two-year contract. At this point, you may be considering a prepaid cell phone to help save money. Here are a few things to keep in mind before you make your decision.

There are two popular kinds of prepaid phones: pay-as-you-go and prepaid monthly. The pay-as-you-go cell phones are easy. You buy the phone, purchase a set amount of minutes to install and you're done. Once your minutes get used up, you simply go to the store and buy more time, literally.

Another common option is the prepaid monthly plan. Like the name implies, you pay a monthly rate to the carrier, which can typically cost around $30 for 200 minutes a month, along with texting, data, messaging and email.

If those minutes aren't enough, you can always pay to add more time or, better yet, look into a prepaid plan that offers unlimited talk, text and data. These can cost between $40-50 a month, depending on the provider.

Those prices sound pretty good, but they do come with a few downsides. First, you'll have to pay the full price for your phone upfront, unlike standard cell phone plans which waive the cost in exchange for a two-year contract.

Your selection of phones will be more limited, as well, and depending on the carrier, coverage and data plans aren't usually as strong on prepaid phones. Still, prepaid phones offer the freedom of no contracts, credit checks, carrier fees or hidden government taxes.

If you're someone who doesn't spend too much time on your phone, going prepaid can potentially save you big over a standard plan. Assess your usage and carrier before you choose, because while cell phones are a necessity these days, the pricey contracts we can do without.

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