Personal Finance 

Could You Save Money with a Prepaid Cell Phone?

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prepaid cell phoneOne of the things I have a hard time with is the cell phone contract. My husband and I were locked into a cell phone contract for two years near the beginning of our marriage. It became a burden to pay the same amount each month, and be limited as to minutes and times we could speak.

Of course, since the early days of my marriage, cell phone contracts have improved. Most of them offer unlimited calling options, as well as options for texting and data. Some plans are all-inclusive, while others are more of an a la carte proposition, where you can get unlimited calling minutes, and then add other features, such as data and text, for a fee. Or you end up with overages that result in huge charges.

Even with these improvements, though, I’m a fan of pay as you go plans.

Could You Save Money with Prepaid/Pay As You Go Cell Phone Plans?

With pay as you go, you don’t sign contracts. You pay for service up front, and then once that service is used up, you make another payment. At our house, we have two prepaid cell phone plans. One, for my husband who uses talk and text quite a bit for his job as an adjunct professor, is a monthly unlimited talk and text plan for $50. He has a phone with a camera and a slide-out qwerty keypad.

My cell phone is a Tracfone. I bought the phone, which has a slide-out qwerty and a camera, for less than $50, and it came with triple minutes for life. So, I pay by the minute. I usually manage to get by spending $20 or $30 every three or four months. Because of service signed up for years ago, and due to the way the service days add up, I have service for the next two years, so I don’t have to worry about some of the provisions that come with per-minute cell phones.

Basically, what we spend averages out to between $55 and $60 a month for both of our cell phones. It’s much better than paying right around $100 a month for two cell phone plans. We don’t use smart phones, but there are prepaid opportunities that allow you to purchase an Android or BlackBerry smart phone and get unlimited talk, text and data for as little as $55  month. You do have to buy the phone separately, but it usually isn’t more expensive than what you would pay to purchase from a company locking you into a contract — and your monthly savings quickly add up.

Evaluate Your Phone Needs

Really, you need to evaluate your phone needs as you decide what sort of plan will work best for you. In some cases, a family plan, with a contract, can help you save money if there are quite a few of you sharing the plan. In some cases, if you have quite a few family members, even several prepaid plans could get expensive. Additionally, if you use a lot of minutes and do a lot of texting, a plan in which you pay for minutes can quickly become expensive. It works for me because I use an inexpensive Internet phone at home and few people, beyond my husband when I’m away from home, ever call my cell.

Consider your situation, how many calls you make, and how often you use text and data. Then compare contract plans, prepaid plans, and per-minute plans, as well as combinations. Choose what works best for you, and what will give you the best value for your money.

(Photo: Michael @ NW Lens)

{ 24 comments, please add your thoughts now! }

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24 Responses to “Could You Save Money with a Prepaid Cell Phone?”

  1. cvargo says:

    My wife and I decided to go in on a family plan with my parents. That way the savings is even greater. We split the 80.99 charge in half and then just pay the extra $10 per line. So we are with verizon… unlimited minutes, text, and 4GB of data. And we pay about $65 a month. My parents got the better deal because they aren’t charged the $10 per line fee because family plans come with two line and each additional line pays the fee. This worked out the best for our situation.

  2. David M says:

    I still have a line in my house because we have a fax machine. Thus I do most of my calls from the landline.

    Thus, I have a prepaid phone were I pay $100 for 1,000 minutes – this card lasts about 8 months thus my cost is about $150 a year or $12.50 a month – thus as Sarah Palin would say – You betcha I can save money with a prepaid phone.

  3. JamesV says:

    I only use my prepaid tracfone as needed, and still have a landline. I buy only 60 minutes (3 months service level) @ $20 every 3 months or so, but I like it cuz even if I don’t renew after 3 months right away, the phone goes dead but I can still keep the ph # I have. Then when I feel necessary to do it, I re-up for another 60 minutes and I can have the phone easily re-activated within an hour or so. I figure I spend for cell phone usage about $6 per month. Of course, I am very deliberate on not talking long on the cell phone and limiting calls to only those that are needed. I do not give many people the cell ph # either. Plus, I tell people not to use the voicemail.

  4. Jason says:

    I must have a traditional plan due to my company’s data access limitations, but my wife has had a pre-paid phone for years. Given her low usage of the phone, it saves us $100’s each year.

  5. SLS says:

    I have a cell phone plan where I pay about $43/ mo. I’ve looked around for pre-paid phones and plans that would be less than that, but cannot find any in my area. Perhaps I’m not searching in the right places? I’d love to pay less per month because I barely use it right now.

  6. Kenny says:

    Fantastic question……We have a family of 4 with my cell phone being a Corporate provided line. So, the other phones have been Pre-Paid Cell Phones for over 4 years.

    Do we love it? Heck yes. It has voice, data, text from Virgin Mobile on it, and we paid $26.72 per month for the two kids and my spouse uses the true prepaid version of it.

    We are in the process of switching over to a plan, since we need better Data coverage now, and also the Android appls are getting better.

    Even then, we will switch to buying Pre-paid Phones, and then adding a 2 year plan on it, that will have a low usage of Data. Even with all 3 lines going on it, it will still be $74.54 per month + taxes. All three lines will have 1000 min plan, plus 200mb of data and unlimited texting on it.

    The only advantage we have with this plan is that we have better data bandwidth, plus Wifi VoIP calling, and hence we will not be using as many of the 1000 anytime minutes, plus Mobile2Mobile, plus Evening and Weekend Calling. These last few benefits are not available with Cricket / VM / Boost or any others, since they are just whole-salers from the big carriers.

    If you have young children, save the money and go with Pre-paid. No kid under 18 needs to have an iPhone unless money is not an issue. Then, they should be carrying around one data phone, one tablet and one voice phone! Just kidding!

    Hope this helps.


    • Noel says:

      Thats super interesting plan. I would love to use this plan as my data usage is limited and I am always in wi-fi area. Could you please link the plan? The only plan that I see is $35 a month with unlimited data and 300 minutes.

  7. Jason says:

    so is now pushing their Simcards. They use the ATT/Tmobile network. So, my plan when my current ATT plan expires in three months to purchase their sim Card for my Iphone 3GS. current pricing is 45$ a month for unlimited talk, text, and data. They also sell their own phones…but I love my iphone!

  8. Dj Hams says:

    I have been on Sprint’s SERO (Sprint Employee Discount Plan) for over 5 years. They dont offer it anymore, but it is $30 for unlimited data, text, nights and weekends, and 500 daytime minutes. I am looking to move over to StraightTalk though, as Sprint doesnt let me use the iPhone or any smartphone on my plan. For $10/month more, I can upgrade to Android.

  9. Wilma says:

    I have a Consumer Cellular phone which is really an ATT Go Phone. No contracts, tiered plans you customize according to what you use and you can change up if in the middle of the month if you know you’ll be over and not get dinged. I don’t talk that much but $22 a month for 100 minutes, 100 texts and 1-3 times a week to use the web is good for me. These phones don’t do You Tube or Pandora radio type stuff but that’s what your computer is for. Use your phone for making calls and texting and you’ll save.

  10. Dave says:

    The article writer missed very important point though, one which I hate seeing people not realize. Remember that the prepaid companies are going to print all kinds of things about how great they are, but they will never mention their single greatest weakness; that you can not roam with them. You know Verizon is widely regarded as having the best network coverage? Well if you buy Sprint service you not only get the sprint network, but you also get full access to the entire Verizon network as well through roaming. Since you can use towers owned by either company you effectively get a much better coverage area. If you buy Virgin Mobile prepaid though (which runs on Sprint’s network) you are not allowed to roam at all, which means that there must be a Sprint tower nearby or you are out of luck. This distinction is actually the main reason that the prepaid plans are able to be offered so cheaply, because they know they’ll never have to pay the other networks big bucks for roaming customers.

    Prepaid can be a great cost-saving way to get a cell phone, but just realize before you go for it that you will be cutting off a big part of your coverage area vs a standard major provider plan.

    • Dioni says:

      But that’s why Tracfone’s new sim card offering, that allows access to both T-Mobile, and AT&T’s network is so good. Between those two companies, they basically have a duopoly on GSM in the USA, and together more coverage than Verizon alone. The only hindrance really is the handset’s ability to swap between the 1700, and 1900 mhz spectrum (the frequencies AT&T, and T-mobile’s AWS frequencies).

  11. Money Infant says:

    We live in Thailand and there is no such thing as cell phone plans here. Cost for prepaid for 2 = $30/mo. Savings over our plan in the US = $120/mo. Booyaa!

  12. Shirley says:

    A few years ago I had a Go-phone with AT&T and opted for the $25 refill. A $ refill was required every 60 days in order for leftover $ to be rolled over into the next 60 days and minutes cost 25 cents. I got it while I was caring for my terminally ill mother in order to be able to communicate with immediate family and I used it very little.

    My mandatory refill date came up in two days after she passed away and I missed it since the phone was clearly not foremost on my mind. Poof!… $87 gone. Even though I realize that it was my own fault and it did serve its intended purpose, I think I still have a bitter taste about Go-phones.

  13. Noel says:

    Tracfone is trumped by many but I wonder how people can stand such expensive service with such poor customer support. I use T-mobile 1000 minutes for $100 for a year pre-paid and pretty happy with it. Only complaint is, I can not use the data. Its a rip off. If anyone gives me better data rate on prepaid, I will go with them.

  14. Linda says:

    Just switched to Tracfone from Verizon and I seem to be having the exact same signals everywhere and no dropped calls at all. But except I am spending 60 dollars less a month!! Thats pretty much the way to go for me and I will stay with Tracfone for a long time

  15. Arnold says:

    I have had a Tracfone for over a year. In that time I have traveled all over the country and have had reception almost everywhere. Where I had no reception, no one else did either, like in Yellowstone National Park. There is no doubt that with them you get an excellent service at a low cost.

  16. Sandy says:

    I have to agree with a lot of what people are saying here with Tracfone. i was nervous to switch over to a prepaid phone but Tracfone has been really great for me. I love the phone i have but most importantly I spend at most 25 dollars a month and I talk as much as I did with the contract phone!

  17. Scruffy says:

    I thought I would chime in about Tracfone. I don’t make a lot of calls so the Tracfone was my best choice. I went with the double minutes which gives me 120 minutes for the price of 60. That’s $20 for 3 months of service. I now have over 1000 minutes built up for use whenever.

  18. Anonymous says:

    I do the Tracfone thing too. I buy 200 minutes every other month. sometimes I buy the time off ebay for about 33.00 no tax. I always use a bonus code too. Ill wait till the tracfone site puts a code out for the 200 minute card. I got a awesome little phone with wifi!and everything elese too and its triple minutes I text al1 the time. talk a little here and there. costs me less than 20 bucks a month. 1 minute = 3 texts. I never go online unless wifi. I think my best friend is crazy town for paying $100 a month. she always is tring to bum rides and cash. im like honey I love you but hell no!

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