What is the difference between prepaid mobile and plans?

Prepaid mobile phones are increasingly popular with those looking to avoid restrictive contracts, and it is easy to see why. Prepaid phones are simple and don’t land you with unexpected bills – they can be a real help for people who have difficulty including a mobile phone in their budget. There are several real differences between prepaid mobile phones and phones run on plans.

Mobile Phone: Prepaid or contract?

The most obvious difference between prepaid and post-paid mobile phones is that prepaid never allows you to spend money you don’t have. There are other differences too, and you will have to make the choice between a prepaid phone and one on a plan before you buy:

With a prepaid phone the user buys a “recharge” to the value of a certain amount of credit (a $15 recharge gives you $15 worth of calls or texts for example). With a plan, the user selects the best combination of features based on usage (low, medium, business, etc) and whether they wish to combine other services such as landline or internet, and then receives a bill to be settled on a post-paid basis.
Prepaid phones may be a little more expensive, on a service by service basis, although with the deals on offer currently, it is possible to get a good deal more value than you pay for (for example, you may pay for a $15 recharge and get $50 worth of credit).
A phone on a plan can land you with an unpredictable monthly bill. “Cap” plans include a value greater than you pay for (as with prepaid “caps”), however a plan allows you to use beyond your cap, which may cause a surprise when the bill arrives.
Prepaid phone recharges have a time limit on them, whereas with a plan you simply use what you use and pay for it later. The disadvantage here with prepaid phones is that not only can you run out of credit if you use it up, you may also unexpectedly find yourself with no credit from one day to the next if the time limit has expired. The limit can be anything from one week for cheaper recharges, to months for larger, more costly ones

Plans and prepaid mobile phones both have advantages and disadvantages, and choosing the right option for you will mean weighing up whether predictability and control over what you spend is more important than the disadvantages of prepaid phones.

Prepaid mobile vs. post-paid mobile

Before choosing your next mobile phone, you will need to decide whether you wish to be billed for a sometimes unpredictable amount but maintain a sense of freedom or whether you wish to fix your spend and run the risk of depleted credit.

There are advantages to both models, and the main difference is control over your financial outlay. There are several inconveniences with prepaid phones, and this should be weighed up against the advantage of not spending above your means.