Are Prepaid Wireless Phones a Good Deal?
Verizon, AT&T and other mobile phone providers are offering pre-paid cell phone service with pay-as-you-go billing. If you like the idea of not having a long-term contract, and you don't use a cell phone all that much, a pre-paid cell phone could be a good option. But first you'll have to sort through all the intentionally confusing plans and offers... |
Prepaid Wireless: Confusing on Purpose?
Prepaid wireless is a way to keep things relatively simple. It works just like rent: you pay for a month's worth of use in advance, and if you don't pay you get kicked out almost immediately. There are no heart-stopping surprises at the end of the month, when you learn that you (or someone else) ran up a four-figure tab. With a prepaid wireless plan, you pay for a certain number of minutes in advance, at a certain rate per minute. When you run out of minutes, you have to buy more. That's simple, honest, and true. But of course, phone companies make less money when things are simple. Here's how your seemingly simple prepaid mobile phone bill can get complicated.
First, there's the "use it or lose it" aspect of the bundle of minutes you buy at the start of each month. Again, this works just like rent; you pay $X for the ability to use an apartment for a month, but it's up to you how much time you actually spend in the apartment. That sounds reasonable, but it isn't with phone service. With rent, the landlord gets the same profit no matter how much or little you use the apartment. But phone companies make more profit when you don't use all your prepaid minutes. That 7 cents a minute bargain becomes 14 cents if you use only half of your prepaid minutes.
Phone companies want you to buy more minutes than you will actually use, and so they make their pricing plans complex. Here are some examples, from several companies offering prepaid cell phone services.
Comparing Prepaid Wireless Plans
AT&T prepaid wireless goes by the brand name GoPhone. It might better be named GoAway because the pricing plans are so complex they actually discourage people from buying. In fact, AT&T deliberately makes it difficult to find out what it costs. For some reason, they force you to compare the specs of various cell phones, then they ask you to "enter your ZIP Code so we can show you the best offers available in your area." It doesn't get any less simple than that.
I'll save you the trouble of drilling down into the geo-spatial specifics. AT&T offers a $50/month unlimited plan, a $25 for 250 minutes plan, a $2/day plan, and a ten cents per minute plan. If you have a smartphone, you'll have to buy a monthly data plan to use web, email and apps. There is no pay-per-use data plan option.
Verizon prepaid wireless also requires your zip code, but you can sort of figure out your costs before providing that information. With Verizon's Pay As You Go plan, you can buy minutes, or days of unlimited minutes. If you want simplicity, go for the 25 cents/minute plan, and pay 20 cents per text message. That's expensive, but simple.
There are two Daily Access options, in which you pay only on days when you use your phone. If you don't use your phone on Monday, you don't pay for Monday. Pay $1/day, and you get unlimited mobile-to-mobile calling. Calls to landlines, and calls made on nights & weekends will cost to cents/minute extra. Texting is also ten cents per message. Bump up to the $2/day Daily Access plan, and you get unlimited calling, but you'll still pay two cents per text. Things get much more complicated as one considers the expiration dates of prepaid minutes, whether you expect to call (or be called) only from Verizon Mobile customers, on weekends, or at night.
If you're really confused, that's exactly what Verizon wants. That's why they offer the Prepaid $50 Unlimited plan. This is for people who are considering the Daily Access plans, but they fear that all the intangibles may push them over the $50/month mark. This plan promises "unlimited web" access, but alas, not with a smartphone. You'll have to buy the Prepaid $80 Plan, which gives you a 1GB data allotment. And of course, the expiration date of your refills will vary, based on how big a chunk you buy.
Net10 is a bit simpler, but there are still some twists. You can prepay $20, $30, $60 or $100 per month. If you buy larger chunks, the minutes are cheaper and won't expire as soon. For example, if you buy 200 minutes for $20, they expire in 30 days. 600 minutes will cost $45, they expire in 60 days. A block of 1500 minutes for $100 is the best deal (6.7 cents/minute), and gives you 180 days to use them. And just to add another wrinkle, you can also prepay $50 for unlimited minutes on a 30-day plan. But none of these plans lets you simply buy a chunk of minutes and use them whenever you like, without worrying about them expiring.
You may not have heard of Net10, but Tracfone is one of the best known names in prepaid wireless. The companies are owned by the same corporation, but they offer completely different sets of prepaid calling plans. At the entry level is the 30 Minutes Value Plan for $9.99/month. Other options are 60 minutes for $19.99, 200 minutes for $39.99 and Family Plans that let you have multiple Tracfones. You can also buy chunks of airtime that come with bonuses such double or triple minutes an future paid airtime purchases. For example, you can buy 800 minutes for $120, and get double minutes on future paid airtime, or 1200 minutes for $130, and get triple minutes on future airtime purchases. You might end up paying less, but it requires a bit of math, hair pulling and a little fortune telling.
You can also shop around for prepaid wireless service from other providers. T-Mobile offers 1000 minutes for $100, and they are good for one year. They also have a variety of Monthly 4G plans that might make sense for smartphone users.
Virgin Mobile may have the best (and least confusing) offer of all. Their payLo plan gives you 1500 minutes for $30/month, which works out to just 2 cents/minute! You also get 1500 texts and 30MB (not GB) of web data. The only minor hitches are that unused minutes expire each month, and payLo plans require you to buy a payLo phone from Virgin Mobile, but the most expensive one I saw was only $49.
Some Tips to Help You Decide
Prepaid cell phones are great if you don't use your cell phone that much. They simplify the process of owning and using a cell phone by allowing you to buy the phone that you want and prepay for minutes that you will be using during the upcoming weeks. You don't need to have a credit card, you don't have to sign a contract and you can cancel your relationship with the cell phone company at any time. It can be a good deal if you want to give a cell phone to a child or senior who will only need it on an occasional basis. However, if you use your prepaid cell phone a lot during a month you will have to frequently load your phone with more minutes. Also, since prepaid minutes are generally more expensive than contract cell phone minutes, you will rack up a larger monthly bill using your prepaid cell phone than if you had a contract cell phone plan that offers you unlimited minutes.
When shopping for a cell phone and cell phone service package you need to determine what is going to be better for the amount of time you spend on your cell phone. People who use their cell phones infrequently, or who just want a cell phone in case of an emergency, are generally better off using a prepaid cell phone, while people who spend a lot of time on their cell phones are better off signing up for a regular cell phone contract.
Here's my advice... talk to friends or neighbors in your area who have cell phones, and find out which carrier has the best signal and coverage in the locations where you plan to use the cell phone. It's not uncommon for phones from one carrier to work great in a certain location, while another carrier has a weak signal or none at all. Then use the information above to compare the pre-paid plans offered by the cellular companies that have good service in your area. Try a pre-paid cell phone for a month or two, and if you find you're using it more than you anticipated, upgrading to a service contract with a set monthly fee may make sense for you.
Do you have something to say about prepaid wireless phone service? Post your comment or question below...
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Posted by Bob Rankin on 10 May 2012
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Most recent comments on "Are Prepaid Wireless Phones a Good Deal?"
(See all 65 comments for this article.)Posted by:
VAL
11 May 2012
Our next door neighbor has dropped monthly plan and switched to BOOST. Claims is is better than all others.
Posted by:
Bob C.
11 May 2012
Here is something I found
Straight Talk offers 1,000 minutes, 1,000 text or multimedia messages, 30 MB of data, and unlimited calls to 411 for 30 dollars/month
They also offer unlimited voice, unlimited messaging, unlimited data, and unlimited 411 for 45 dollars/month.
And an unlimited international plan that includes unlimited minutes to certain locations for 60 dollars/month.
Posted by:
HOWARD
11 May 2012
you forgot to mention "straight talk" sold thru wal-mart. buy phone, $30/mo. gets 1000 min./1000 texts, free 411 and other extras. for 45/mo unlimited calls/texts and unlimited web!!! also have smart phones, using only $45/mo. rate.
Posted by:
Gary
11 May 2012
i don't use a phone a whole lot and I hGaryave had a $9.95, double minutes for life Tracfone for years and it truly is the lowest cost prepaid at just under $7.00 per month. $19.95 for 120 minutes and 90 days! All unused minutes carryover. The coverage is the best of ANY carrier because they use multiple different networks and you can get GSM or CDMA phones depending if you're urban or rural. I haven't found a place in the country yet where the phone didn't work...........Luv it.
Posted by:
Robert
11 May 2012
Bob, We have the Consumer Cellular plan. The basic is only 19.99 and We get 250 minutes per month, which is actually more than I need anyhow.I've had no real trouble with signals and have no complaints with them.
Just happened to notice they weren't listed in Your article.
Cheers
Robert
Posted by:
howard
11 May 2012
You didn't mention Boost Mobile. I have used them for years and I have talked to almost every other cell phone provider, pay as you go and contract, and they all admit they can't beat Boost's deal. It starts at 50 bucks and with their shrinkage plan, which is they knock off 5 bucks for every six on time payments, my bill is 35 dollars a month for unlimited talk, text and web. That's as low as it goes but I think it's a great deal. I took a cruise a couple of years ago, was out in the Gulf of Mexico out of sight of land and my phone still worked which I think is phenomenal. The only draw back is you have to buy a phone, but they have them in all price ranges from 60-70 up to 200 and 300 dollar smart phones. If someone knows of a better deal, please tell me.....
Posted by:
Art
11 May 2012
Switching from a Verizon contract to Virgin Mobile prepaid five years agp was really a cost saver for me. I am a very light user, and I get more than all the time I need for $80 (plus sales tax) a year.
The unused minutes roll over, customer service is always good, and signal (Sprint) coverage is excellent wherever I have been. Also, phone cost is low - I have never paid more than $10 or $20 for a phone.
Posted by:
charles
11 May 2012
Bob, i will add one more to the mix. It appears to me to be a fairly decent plan. No contract, no cancellation fee, etc. I may have to get a prepaid card in the near future if my granddaughter can't keep within the minutes of the plan i bought her. But, it is called the Mobal Freedom Plan. (yes, Mobal). I won't go into the particulars,l but briefly: 100 min @ $10; 250 min @ 20; 400 min @ $30, etc. Internet is $.51 per MB. U do not have to buy a phone from them, but if u have your own phone, u have to get a SIM card. Not expensive. I don't know if Bob permits web addresses, so if u r interested just google "mobal freedom plan" Basic is $.25 per min; $.10 per text.
Posted by:
EastSlope Charlie
11 May 2012
I use TracFone only because I was able to buy the base phone for a tad less than $3 (on sale) with 120 minutes on it as a 'thank you'. BUT TRACFHONE HAS **THE** WORST CUSTOMER SERVICE I HAVE EVER USED! -- After the first few encounters I started to keep a log of phone calls. FIRST 'fone' I got on sale with the 'bonus minutes' lasted 29 days before it quit working but took me 78 hours 32 minutes to resolve -- call that 3.25 DAYS on the phone to get a replacement sent to me. SECOND 'fone' lasted me 9 days and was an 'upgrade' from the first 'fone' I got. I had to argue to transfer the minutes. It took me 47 hours 21 minutes to get it sorted out - call it 1.9 DAYS actively on the phone. THIRD TIME WAS THE CHARM: 2d phone lasted 22 days. So far it's been since Sept of 2010 and I've only spent 87 hours 21 minutes dealing with problems about billing - another 3.6 DAYS of actively sitting on the phone talking (OK, sometimes I was arguing) with them. So, in a little less than 2 years, I've spent 1 WEEK, 1 DAY and about 18 HOURS actively ON THE PHONE trying to resolve problems. Only I'm retired and can afford to spend time on the phone with them. My advice to people: KEEP A LOG, GET NAMES -- because when you go back to Kick Arse, you can actually name names as you take even more names! But hey! The phone was less than $3 with 120 pre-loaded minutes as a thank you! - What a Company! Whoda thunk they'd thrive and GROW with that kind of service!!!! But, on the bright side the $3 phone gives me minute which don't seem to disappear at the end of the 90 days until I have to renew. Once I had over 3000 minutes on my phone!!!!! But minutes are like military ribbons - I fought for every-single one I ever got! So figure about one hour on the phone trying to get your bonus minutes for every minute you buy! And ONCE last year I got resolution in --honest -- 5 minutes and 3 seconds! I told the operator I was speechless, and she said 'good' because she had other customers. Again proving that the proofs of God are Subtle, VERY Subtle.
Posted by:
Liz
11 May 2012
Hi, Bob,
A note on Net 10: My husband has had a Net 10 phone for several years. For his plan, he pays $30 for a 2-month service that includes 300 new minutes.
Although we do have to renew the service every two months, the unused minutes do not ever expire. They simply rollover and are added to the next 300 minutes you buy every other month.
For an average user, the minutes add up quickly and they never expire. The plan is simple, and as long as you renew the service every 2 months, you're basically paying only $15 per month with lots of minutes that do not expire, and will rollover indefinitely.
These minutes can be applied to text messages too, and for international calls. We've never had a reception or usage problem. There are many other plans also available on Net 10 for all types of customers.
The catch is that if you fail to renew the service every other month (or whenever your plan is set to renew), you lose your phone number, and have to call customer service to start again. We had to do this only once (that was enough!), and after a long call, our original number and service were finally restored.
BTW, we're not associated with Net 10, just satisfied customers -- so far.
Thanks for all your informative articles. We find them most helpful.
Posted by:
Lori
11 May 2012
I am a heavy cell user, and Straight Talk has been fantastic. $45 per month, all in all done, for all my voice and iPhone needs. My sim uses ATT towers, but far, far cheaper. For iPhones, etc. you can get a sim to use their service for $14.99 and then $45/mo afterwards.
You can buy service cards in advance and put them in "reserve" to be applied as you need them.
Posted by:
Ms Mary
11 May 2012
Thanks for doing this article. All I wanted was an emergency phone for the car. I tried ATT and lost money as the months went by and the use expired - I didn't get that at first. I was hospitalized and didn't want to be out of touch so put $100 on the phone. When I got to the hospital I tested the phone and there was $6.xx left on it! They were charging me for stuff sent to my phone. You didn't cover the mistakes they make (a lot). I complained and got maybe 2/3 back. Still want that emergency phone.
Posted by:
Mike
12 May 2012
Thanks for the good article, Bob. Some plans here I've never heard of. Straight Talk from Walmart (mentioned many times in the comments) is great for unlimited everything if you have reception where you want to use it. The cheapest for real light use is Tmobile. (again if you have reception) After you add $100 of minutes that expire after 90 days, you can add $25 at a time and minutes last for a year. So you can stash a phone for an emergency or back-up for essentially $25/year. It doesn't get any better than that!
Posted by:
Lee
12 May 2012
Please help, I am so confused.. Need to get a plan for my son who lives in Canada for 8 months and USA for the rest.. Need unlimited everything plan for Ontario region that has a good connection and he can call and text to the USA..Any advice would be greatly appreciated..
Posted by:
Becky
13 May 2012
I have had Tracfone for about 8 years now. In that time I have only had 2 phones. The second one I had to get because they were upgrading their service and the old one was not compatible. I have never had a problem. I got it basically just for emergency use since I am on the road at night a lot. I have never had a problem with my service, which costs me just about $100 a year! I am very happy with it.
Posted by:
Rob
14 May 2012
TracFone: I have had only 3 phones in nearly a decade of time with them and one was due to a system upgrade, and the last one was purchased cuz I dropped the one before one too many times... So the phones have lasted for years without problem. I have also purchased TracFones for two other people. All have come from WalMart or from the website. I pay about $100/year for service and have built up around 2000 minutes by using promo codes and specials like triple minutes. In our area TracFone uses either AT&T or T-Mobile. Service depends on how good those provider's networks are.
I do agree that in the beginning "Customer Service" sucked. From the accents I think it was in India. The scripts they had to follow were awful. "Service" was awful. The last time I called (this year) it sounds (from the accents) the center may now be in Mexico, it is easier for me to understand what they are saying, and the scripts are far better. Service much better as well. They did manage to screw up my minutes transfer when I got the new phone (so make sure you make notes of how many minutes you have before "upgrading" to a new phone) so I had to call a couple of times to straighten that out.
Drawback is they lack a true smartphone at this time.
Posted by:
neena
14 May 2012
Hi Bob, I was very interested in what you had to say about Virgin Mobile, however, it appears you were interrupted before finishing that paragraph. Wondering what was after the "...but the..."
THX for great info that always helps me figure out what I'm currently working on...letting go of the AT&T GoPhone I purchased just last month.
EDITOR'S NOTE: Sorry, fixed now.
Posted by:
mark
15 May 2012
There are always trade offs. Pre-pay gives up coverage and customer service in trade for cheaper service. With the exception of tracfone/net10 the coverage map is always less than you expect. A cellphone that doesn't work where you are is just a paper weight.
After many years of selling and calling both pre- and post-pay (several companies), I can say that prepay customer service leaves a LOT to be desired; you get exactly what you don't pay for.
If you trash phones a lot, prepay is often cheaper than insurance. If you demand a lot of hand holding stick with post pay.
Posted by:
Carole
15 May 2012
Sometimes life doesn't go the way you plan. We had some real hardships and I am swearing off those contract plans!
Now we all have unlimited text only for $15/month with Tmobile, monthly plan. (We all had Tmobile phones prior) You add money for minutes at .10 a minute. The extra money rolls over. My kids only text me anyway.
But I found a plan for my son who wanted a Smart phone. I just got a great Samsung for my son at Walmart with Tmobile for $200. It was listed on their site for $370.00 $30/month unlimited web! (well 5Gb at 4G, the rest at 3G) His new phone also has wifi.5Gb is $70/month with a contract. Unlimited texting! And 100 min of talk (this doesn't roll over like you said).
For the price, I think it's great! And again, NO 2 YEAR CONTRACTS!! I'm real happy!
Posted by:
John
17 May 2012
Low volume TracFone user for several years. Get 450 "units" by renewing for a year at about $95. Have built up so many units that I now just auto-pay the $6.50 a month to keep it active. Have dropped it several times, picked up the pieces and turn it back on. Worse thing is trying to use in the sun...forget seeing the screen. May go for an updated phone some day.