If you’re looking to get a new phone plan, you can choose between pre-paid and post-paid options, but you’ve got to know what the differences between them are to determine the best choice for you. They both have pros and cons, so taking the time to learn the difference will help you out.
Payment Upfront Versus After The Fact
The main difference between prepaid and postpaid phone plans is when and how you are charged for the service. Postpaid plans bill you for your data, talk, and text usage after a set period, usually monthly. This model is very convenient because you can’t run out of data or minutes mid-month, even if you go over your limit. Instead, you’ll just be charged extra for exceeding the limit at the end of the month. You can use services continuously without worrying about losing a service because you hit a limit.
These are the types of plans you usually get roped into with big carriers like Verizon and T-Mobile, and they are usually contracts—you agree to a certain length of service, like a full year, and breaking your contract can include penalty fees. However, postpaid plans often come with additional perks like international roaming, free streaming subscriptions, and premium customer service. Such plans usually have higher data thresholds, too. Most of them offer unlimited data these days.
Prepaid cellular plans are the opposite in many ways and require you to purchase fixed amounts of talk, text, and data upfront. You have to pay for the service before using it, and if you use up all the data you paid for, you’ll have to purchase more in order to keep going. Think of it like buying a gift card—you have a hard limit that you can use. Once it’s all used up, you have to purchase another gift card to keep spending.
The main benefit of a prepaid cellular plan is that you don’t get locked into a contract with a carrier. If you want to switch to a different carrier, you can do that at any time without worrying about penalty fees. With prepaid plans, you also know how much you are spending upfront. There are no unexpected charges when it comes to these plans. That said, they often lack some of the same perks that contract postpaid plans have, such as international roaming. Data throttling may also be a concern in some cases.
Buying a New Phone: Upfront or Through Installments
If you are looking to buy a new phone from a carrier when you get a new plan, the way that works is also different between prepaid and postpaid plans. Because prepaid plans don’t do contracts, if you want to buy a new phone from a carrier offering such plans, you’ll usually have to pay for that phone in full right then and there. Naturally, that could be several hundred dollars. It’s a big investment, but it does mean that the phone fully belongs to you from day one.
Postpaid phone plans will allow you to purchase a phone outright if you want to, but they also offer you the ability to finance the phone via monthly installments, often through 24-36-month payment plans. This can make the financial burden of buying an expensive device much more manageable. On the other hand, it means you’ll be contractually locked to the carrier you bought that phone from until the financing is complete.
So much like the cell service plan itself, prepaid plans give you more freedom and flexibility, while postpaid plans are more affordable but lock you into contracts that will cost you extra fees if you break them. Speaking of buying a phone, your options might differ depending on the type of plan you go with as well.
The Types of Phones Available With Each Plan
Carriers that offer prepaid plans often have a more limited stock of phones available for you to purchase. This doesn’t mean that they don’t have any of the newest phones, but there just might not be as much to choose from compared to big-name carriers like Verizon, who offer postpaid plans. The big carriers will usually have every major phone released in the past two years available to pick from, and perhaps even every version of those phones.
Now, while prepaid carriers may not have as many phones for you to choose from when buying from them, they are more likely to let you bring your own phone to them and just have the new plan you are buying attached to it. Frankly, while the things I’ve said here are generally true for the different types of carriers, it does depend on who you are buying from, so make sure to do your research to figure out what phones each carrier has available for sale.
Prepaid Flexibility Versus Postpaid Perks
I briefly mentioned earlier that prepaid plans tend to be more flexible, while postpaid plans tend to have better perks. Let’s expand on that because it’s about more than just contracts or lack thereof. As you know, different phone plans offer different things—some provide unlimited talk and text, others offer a set amount of data to use each month, and so on. Well, there tends to be much more variety in prepaid plans compared to postpaid plans.
Specifically, there are a lot more minimalist plans available from prepaid carriers, which are some of the most affordable plans on the market. For example, some prepaid plans may have data limits as low as one GB, and it may only cost you $10 or $15. That doesn’t sound like a whole lot, but if you are someone who doesn’t use their phone very often, these minimalist plans might save you a whole lot of money.
Postpaid plans tend to have less variety. Even their cheapest option might be a lot more data and minutes than you need, leaving you paying for stuff you don’t use. On the other hand, postpaid plans tend to have more perks attached, such as the aforementioned free streaming subscriptions, international roaming, and premium customer service. This makes postpaid plans a better choice for heavy users who want more than the bare minimum from their phone.
Differences in Coverage Quality
Finally, there can be a difference in network coverage quality between prepaid and postpaid phone plans. Most prepaid phone plans are offered by MVNOs, which are smaller carriers that borrow network bandwidth from the bigger carriers, like AT&T or T-Mobile. This means they can offer you coverage at a lower price, but it also means that they get second priority if the network has to start doing triage.
LTE coverage for AT&T (Blue), T-Mobile (Pink), and Verizon (Red)
If, for instance, the Verizon network gets overly congested, they will throttle network speeds for Verizon MVNO users before they do the same for the people paying for Verizon postpaid plans. Now, admittedly, this generally isn’t a huge issue, as modern networks are quite robust and usually have enough bandwidth to go around. Throttles are generally pretty brief if they do happen.
Still, it’s worth considering if you are comparing a prepaid plan to a postpaid one. If you go with a prepaid plan, network throttles are something you may have to deal with from time to time, while postpaid plan users usually don’t have this problem to worry about.
Ultimately, the main consideration when it comes to prepaid and postpaid plans is the low cost and general flexibility of prepaid plans versus the greater benefits and ease of use of postpaid plans. Neither one is objectively better than the other, and which one is right for you depends on what exactly you are looking for in a phone plan. Make sure to do your research and avoid common pitfalls when choosing a carrier.
