The average person is probably paying way too much per month for their phone plan. In reality, unused data and user fees are adding up to hundreds of dollars every year that Americans could be spending on other things. That's why more and more people are making the leap from annual phone contracts to prepaid plans.
Prepaid phone plans are much different than they were a few years ago. While once considered restrictive and skimpy, plans today offer something for heavy data users, light texters, and everyone in between. The experience can be identical to having a contract with a major carrier.
Saving a ton of money by switching to a prepaid plan is catching on! Roughly 36% of Americans have some type of prepaid cellular plan. Ready to shop for the most affordable prepaid plan that doesn't leave customers feeling like they're scrounging for data at the end of every month? Keep reading this guide to how to find the best prepaid phone plan. In this post, we'll cover pricing, data limits, network coverage, special perks, and other factors for selecting the plan offering the most value without the contract.
Assess Usage Needs for a Prepaid Phone Plan
Prepaid plans are flexible enough to let users choose options that fit their needs. The first step is assessing personal monthly data use. Phones actually keep track of this.
For Androids, find the "App Data Usage" section under "Settings." A phone offers a breakdown of total data use for the month. Users can also view data use across different periods for a fuller picture. For iPhones, find "Mobile Data" or "Cellular" under "Settings." For reference, the average smartphone user needs 15 gigabytes (GB) per month.
Next, consider user habits. Is a phone going to be used for heavy streaming or gaming? Create a data buffer against chronically going over. Finally, determine calling needs based on nationwide or international calling. Prepaid plans generally offer free unlimited calls throughout North America. Remember that it's not a big deal if a customer soon discovers that their needs have outgrown their data allotment. Prepaid plans offer a level of flexibility that's simply not possible with iron-clad annual contracts from major carriers.
The beauty of prepaid plans is that users can assess their needs on a month-to-month basis instead of an annual one. They have the freedom to increase data, decrease data, or jump to something entirely different. Getting out of an annual contract with a major carrier often requires hefty fees that nearly total the full price of staying in the contract. A customer could also be financially responsible for the "free" phone they received for signing up for an annual or multiple-year agreement. The Federal Communications Commission actually recommends that consumers switch to prepaid phones to avoid early termination fees.
Many phone customers are surprised to learn that they're using much less data than they thought. While 76% of Americans have an unlimited plan, 55% of those customers are connected to Wi-Fi most of the time. Researchers have found that constant access to Wi-Fi is the main reason why most people don't even come close to using their mobile data allotments. If data is always on, users may be using Wi-Fi most of the time without even realizing it.
Understand Plan Types
Prepaid plans come with different options. Here's a rundown:
- Pay-as-you-go: Ideal for the person who just wants an "emergency" phone. These plans also accommodate light phone use. Users get away with having a phone ready when they need it for just a few bucks per month.
- Monthly prepaid plans: These plans work similarly to traditional contract plans. Users pay a flat monthly rate for a set amount of minutes, texts, and data.
- Unlimited plans: Ideal for heavy users who wish to avoid overage fees, these plans provide unlimited usage.
Prepaid carriers send convenient alerts when it's time to pay a bill. It's not much different from paying for a regular phone contract. Users can either refill minutes and data manually or select an autopay feature that allows them to have funds taken out by the carrier on the same day each month.
Check Network Coverage
Prepaid phone plans don't usually operate on their own networks. Prepaid companies actually piggyback on existing mobile networks from the nation's major providers. Yes, that means users paying just a few dollars per month for their plans are essentially getting the same service as people on pricey contract plans. Some plans work better for people in specific geographic locations. It's smart to research network coverage for the carriers in a specific area when making a choice.
Look for Flexibility
When pivoting to prepaid service, it's important to search for a phone plan that doesn't have tons of penalties built into the contract. Prepaid users need flexibility that allows habits to change with their needs. This is especially important while adjusting during the transition away from an unlimited plan from a major carrier. For this reason, customers should consider starting with a larger data plan on a no-contract phone for the first few months. It generally just takes one click to downgrade to an option with less data the next month.
Compare Pricing
While most prepaid plans are good deals, customers still need to do apples-to-apples comparisons to find the best value for their money. Read the fine print to add up activation fees, equipment fees, and other factors that impact total cost. It's also important to pay attention to overage fees.
Tally Data Speeds and Limits
While saving money on a cell plan is great, the quality of the user experience matters. That's why it's important to pay attention to data speeds. Confirm that any plan tier being considered offers adequate data speed. While 4G can be sufficient for casual data users, someone who relies on their phone for streaming entertainment or logging into video calls for work may require 5G to keep up.
Understanding a prepaid company's throttling policy is important. All the big carriers have these policies. Throttling happens when a customer has used up a certain amount of data in a single billing cycle. When it happens, they'll suddenly notice lags when attempting to stream or download. Many customers aren't aware that throttling has been 100% legal since new net neutrality laws went into effect in 2018. Any provider is allowed to slow down speeds as long as they aren't blocking specific content intentionally. If throttling is an issue, it's easy to increase data with a prepaid plan without the hassle of signing a new contract.
Look at Device Compatibility
Most Americans have stopped upgrading to a new phone every year. Many prepaid carriers offer BYOD (bring your own device) policies. This can cut down considerably on the cost to switch.
Will an existing phone work with a new prepaid service? Usually! Prepaid carriers generally require their customers to bring an unlocked phone that's compatible with their network technology. This can mean GSM, CDMA, LTE, or 5G-NR based on the type of coverage being offered. If a phone won't work, check to see if a carrier sells low-cost phones that work with their service.
Consider Family Plans or Group Discounts
With the average American spending $1,342 per year on mobile phone services, it could pay to combine costs as a family to get a discount. It's a misconception that everyone needs a traditional phone plan to get family or group coverage. Many prepaid carriers allow users to split their coverage with friends and family. In fact, some let users share data with up to five lines with talk and text.
To decide if a shared plan is the right option, carve up the data provided to see how much each user being added to the plan will get. It's also important to take user habits into account. With data being shared in a single pool, a "super user" won't get throttled when they go over their share. The extra data will simply be eaten up from the shared pool. That means that the rest of the family could run out of data before the month is over. The easy solution is to bump up to a slightly more robust data plan for what usually works out to just a few dollars extra per user.
Look for Additional Perks
Don't confuse today's prepaid and no-contract phone plans with plans that were available a decade ago. While no-contract plans used to be synonymous with bare-bones service, many are now nearly indistinguishable from much pricier contract plans. Prepaid carriers are really starting to catch up to traditional carriers when it comes to offering reliable service and special perks. Extra perks can be especially important for someone with a long daily commute. Frequent travelers can also benefit from tech perks that untether them from the need to seek public Wi-Fi while on the road.
For example, many prepaid plans now include hotspot access. This can be a huge perk for someone who needs to connect a work laptop to the Internet while traveling because it turns a simple smartphone into a personal Wi-Fi hub. Additionally, many plans now include free international roaming for users traveling to Canada and Mexico. For the 70% of employees working from their mobile devices, the importance of a reliable data plan cannot be understated!
Many prepaid plans have even jumped on the entertainment bandwagon. Most people are already aware that many mainstream carriers offer free streaming on Netflix, Disney+, Hulu, Apple TV, and other popular platforms when customers sign a contract. While this still isn't standard in the prepaid world, carriers do occasionally offer perks like unlimited music streaming or discounted and free monthly streaming subscriptions. These deals aren't always widely advertised. It never hurts to ask about any deals that are going on before signing up with a new carrier.
Final Thoughts: Is a Prepaid Plan the Smart Choice?
Switching to a prepaid phone plan is considered one of the best money-saving hacks of the moment. Most of us will spend $200,000 on streaming, cable TV, mobile, and Internet in a lifetime. Switching to a prepaid carrier could help to chip away at that just a little bit.
It's possible to save a few hundred dollars per year by pivoting to a prepaid phone. Users also need to consider the "frustration factor" before making the leap. Dig in to see the details on how what is being offered stacks up against real-world monthly data use. When a customer depends on their smartphone as part of their daily workflow, bumping up to a prepaid plan with a higher data allowance is an easy, affordable way to stay connected without counting bytes. The big surprise for most customers that make the leap to a prepaid plan is that they don't notice any difference in service or reliability.