Is Prepaid Right For You? Do The Math!
A recent comment on my wireless service in Indonesia post along with a conversation I had with someone in our local Office Depot reminded me to re-examine the whole prepaid versus contract situation. I tried to come up with simple guidelines I could articulate to someone. What I came up with on the spot was not entirely accurate, but it was close. This post will hopefully be more accurate.
Consider the following facts about your typical $40/mo 2-year contract plan with the major U.S. mobile network operators:
- 450 “anytime” minutes included
- Night/weekend minutes are free
- Mobile-to-mobile (calls to mobiles on the same provider) are also free
- Typical cost with taxes and made-up fees: about $45
For the purposes of comparison, let’s assume you only use 450 minutes total per month, whether those minutes fall under one of the “free” buckets or not. At $45/mo, you’re essentially paying $0.10 a minute for service. If you use less minutes overall, then your effective per-minute rate is higher. You might be able to use more than 450 minutes a month thanks to the “free” nights/weekend and/or mobile-to-mobile, making your per-minute usage lower.
If you use less than 450 minutes a month–and I’d wager a lot of people are in this category–you are far better off with a prepaid plan. Prepaid minutes can be had for $0.10 a minute, or less if you shop around. I can get my minutes on T-Mobile Prepaid for about $0.094 a minute, buying in chunks of 1000 minutes. If you’re willing to venture into the smaller, less known MVNOs, you may be able to do it even cheaper.
This only covers voice. The only reasons you might consider a conventional postpaid plan are:
- You make heavy use of data. Prepaid data at an affordable price doesn’t exist, except with one CDMA-based MVNO that a reader swears by: STi Mobile.
- You use lots of text messages. Prepaid text messaging prices aren’t exactly cheap, in volume at least. Unlimited text messaging can be had for $10-$20, depending on carrier.
- You consistently use more than 450 voice minutes a month.
Of the major carriers, I tend to recommend T-Mobile prepaid service. It is by far the simplest of the prepaid plans out there. The minutes you buy last for a year after you buy $100 worth, and are competitively priced. Verizon and AT&T make their prepaid choices way too complicated. Even the sales reps get confused. Sprint doesn’t directly offer prepaid service, but a number of MVNOs that use Sprint such as Boost Mobile and Virgin Mobile are available.
Even if you consider the cost of buying phone outright versus getting it free with a 2-year contract, is prepaid right for you? Do the math and find out for yourself! Why pay each month for minutes you don’t use?