Prepaid vs. Cell Phone Contract: Comparison for New Users

It’s a dilemma for many people, deciding whether to get a prepaid phone or commit themselves to a cell phone contract. Comparison of the two seems pretty simple — either you want to sign up for a multi-year deal, or you’d rather pay as you go. However, there is a little more to the decision than just the contract. Here is a prepaid versus cell phone contract comparison:

•    A cell phone with a contract provides the user with a set amount of minutes to use each month. Prepaid phones allow users to pay up-front for their minutes. Prepaid minutes can expire, while any overages on a monthly plan are very expensive.
•    If you have poor credit, you may not qualify for a cell phone contract. Prepaid cell phones allow anyone, even those with bad credit, to get a phone and pay for minutes up-front.
•    Prepaid cell phone plans cost more than contract phones.
•    When users sign up for a multi-year contract, they may get bonuses, such as a free phone or rebate.
•    Both contract and prepaid phones offer a number of different packages based on your needs. These packages include minutes, text messages, video and more.
•    Prepaid plans are good for parents who want to limit their children’s talk time, or avoid paying for overages.

In our prepaid phone versus cell phone contract comparison, we think the bottom line comes down to cost. If you can afford the possibility of minute overages, and know you will be able to make payments for several years, then choose a contract phone. However, if your life is constantly in motion, and you aren’t sure where you will be financially in the future (or geographically for that matter) then choose a prepaid phone.

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