Prepaid cell phones can save you money

Last week, I spoke with personal finance writer Greg Karp about how young adults can save money. We brainstormed ideas for one of his upcoming newspaper columns. “I’m willing to bet that many young people can save money by cutting back on their cell phone,” I said. “It’s kind of shocking how these have become a Need instead of a Want.”

“Yeah,” Karp said. “And what about prepaid phones?”

“I don’t know anything about them,” I said.

“They’re great,” Karp said. “My wife and I are saving hundreds of dollars a year by switching to prepaid phones. I’ll send you a link to an article I wrote.”

It turns out that Karp is something of a prepaid phone evangelist. But no wonder! In this piece from last December, he describes the benefits of switching two cell phones in his household to prepaid:

The net result is savings of about $800 per year, compared with a family plan through a major contract wireless carrier. I haven’t missed my former plan at all. And I’ve cut my monthly cell phone cost to less than $10. My reception and call quality are actually better.

Karp documented his plunge into prepaid phones with two posts to his blog. In the first, he explains why he decided to make the change. In the second, he actually describes the process of switching to prepaid. (This last post was very helpful to me. My big hang-up on making these sorts of changes is figuring out how to actually do them.)

I’m in the middle of an iPhone contract with AT&T but I generally don’t come anywhere close to using all of my 450 monthly minutes. (I had accumulated thousands of rollover minutes until I blew those all away with a phone-intensive business project in March.) I’m willing to consider moving to pre-paid once my current contract is over. When I do, I’ll check out the following providers:

Consumer Reports had an article in its January 2009 issue about how to buy a prepaid phone. Also, check out the following from 20-Something Finance: A review of Net10’s prepaid wireless service

That last article contains some shocking numbers. In the U.S., only 16% of adults use prepaid phones, but:

Elsewhere around the world, prepaid is the norm. Prepaid market share is 35 percent in France, 66 percent in the United Kingdom, 76 percent in Hong Kong, and 90 percent in Italy, according to a recent Federal Communications Commission report.

Basically, major consumer advocacy organizations are proponents of prepaid cell phones, and they’re beginning to catch on among the financially savvy. But so long as it’s more profitable to pitch traditional cell plans, you’re not likely to see a mass movement to prepaid in the United States.

Addendum: Consensus among the commenters seems to be that prepaid cell phones make sense for those who are low-volume users. If you’re a heavy cell phone user, you’re probably still better off with a contract. Your best bet is to spend the time to run the numbers.

More about...Frugality

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others

There are 148 comments to "Prepaid cell phones can save you money".

  1. ArandomPerson says 05 May 2009 at 05:17

    Thanks for this post! I have been toying with the idea of geting a pre-paided cell phone (I have only a land line) for a two years now.

    Still no great need, just a want. I have been overwhelmed whenever I went to a counter or looked at phones so this is a good intro post (with good links) for me.

    Thanks again!

  2. Andy J says 05 May 2009 at 05:24

    I agree it could save me money on basic phone service. I don’t use many minutes in general and most of the people I talk to use the same service provider so the calls are free. As a big user of unlimited multimedia and texts on my phone, I don’t think prepaid phones are the way to go.

  3. SF_UK says 05 May 2009 at 05:25

    I switched from contract to PAYG last year (on Orange in the UK). It was as easy as ringing them up and saying I wanted to switch. New SIM arrived in the post, stuck it in, registered it and put on some money, and I was away – I even got to keep the same number.
    Before I switched, I went through all my old bills (for about 18 months), and made a spreadsheet with billing amount, number of minutes and number of texts (I don’t use other stuff). Then I worked out how much that number of minutes would have cost on the proposed PAYG plan. As soon as I did it, I realised I’d been literally throwing money away for over a year, which was a big incentive. So far, I think I spend less than £10 a month in total.

  4. Four Pillars says 05 May 2009 at 05:26

    I switched to pre-paid about 5 years ago – my cell phone costs are about 1/3 of what they used to be.

    Keep in mind this plan is perfect for someone like myself who doesn’t use their phone very much. If you rack up the minutes then it might not be so great.

  5. jb says 05 May 2009 at 05:33

    Yup. I now pay about $25/month for my cell phone usage. My usage hasn’t changed at all, I just switched to prepaid. And that price includes everything; I don’t get a bill later for taxes, etc. I don’t really talk on the phone much; someone who does use the phone a lot would not find this as useful.

  6. Coupon Artist says 05 May 2009 at 05:35

    I have been thinking about getting a pre-paid phone for a while now. I’d been holding off because when I looked at Verizon it seemed like the minutes expired if I didn’t use the airtime within 30 days. Thanks for this post, it was helpful and provided links to other plans that don’t seem to have that feature.

    Of course, the cheapest thing is having no cell phone at all, which is what I have now, so maybe spending even for the prepaid phone isn’t the best plan… 🙂

  7. Rodney says 05 May 2009 at 05:40

    Prepaid is good if you don’t need the data plan on your mobile.

    Take the iPhone, in theory you need a plan and can’t switch to prepaid unless you do some magic on the phone. But, even if you have prepaid, you lose being able to access data unless you have access to wifi.

    I just wish there was also a prepaid data plan on phones.

  8. TW says 05 May 2009 at 05:41
    I love prepaid phones, we have been using them for the last couple of years. Tmobile has a very robust offering and great reception in my area.

    You really have to do your research, some of the companies have “per day” usage fees, you pay 1.00 every day you use the phone and then a minute fee (usually very low). By the time you run the numbers you are better off with a low minute contract. The method I prefer is by minute charges only, although the fee per minute is higher, if you don’t use your phone that much you can save a lot of money. $100.00 on my wife’s phone has lasted more than six months; her usage is very low.

    I agree that these things have made their way into most peoples “needs” categories. I also can’t stand the way our culture thinks we all have to walk around talking on them all the time.

    I know this is shocking but there was a day when we didn’t have cell phones, and we all made due just fine. Yes, they are convenient, yes, they can save time, no, you don’t have to walk around with one (or worse yet, a blue tooth((Look at me! Look at how important I am!)) to your ear all day long, save up some of that conversational energy for when you get home, everyone around you doesn’t want to hear about what song you have mastered on rock band!

    Ok, got off track there, yes, prepaid phones can be a great deal. I advise you do a spreadsheet, take your average per minute usage from your contract and figure out what your per minute charge would be with a prepaid setup, don’t forget to include daily usage charges if they roll like that, don’t forget charges for text messages either. I think a lot of the companies are trying to make it so you start thinking about a “cheap” contract, making prepaid more of a choice for those with bad credit or those who don’t like contracts (me).

    One thing, I don’t think you could use a prepaid setup with a data plan so your Iphone may not work with prepaid, not sure about that.

    TW

  9. td says 05 May 2009 at 05:45

    Coverage is still something to take into account when switching carriers – try to read reviews and ask people you know who use the network you’re considering joining in the places you’re most likely to use the phone.

    However, if you use your phone heavily, prepaid isn’t necessarily cheaper.

  10. Adam Baker says 05 May 2009 at 05:45

    I’ve never really considered this an option until recently. Next month, when we move overseas, we are going to be trying this set-up for the first time. I think it’ll work out for us well since we use such low amount of minutes anyway.

  11. Bruce says 05 May 2009 at 05:48

    I switched to prepaid over two years ago if you use page plus cellular you can even keep using your verizon phone. It has saved me a bundle and I still have my music player, camera etc…

  12. DG says 05 May 2009 at 05:52

    I am a huge fan of the Tracfone. I have been using them for the last 5 years, because I really need one when I occasionally travel. The best deals can be found on their website, with packages were you can get a phone with your year’s subscription and minutes for the same price you pay just for the service. If you talk all the time on your phone prepaid is probably not for you, but I seldom use mine so this option works the best for me.

    • paula white says 01 July 2013 at 17:46

      I have used the TracFone for about 5 years also. But (isn’t there always a but) I happen to live in Vermont. There aren’t enough towers to “ping” from, so I’m not alone. Even the people with Verizon, AT&T, etc. have the same problem. Your talking then nothing. So I use my TracFone just for emergencies etc. So the Green Mtn. State is still green! LOL But we have had people die because there WAS an emergency and their cells wouldn’t work! Sad!

  13. Nancy L. says 05 May 2009 at 05:53

    Agreeing with Andy J. (#1).

    When we used our phones as “phones”, I definitely only used around 100 minutes or so a month. Now, however, we use our phones almost constantly as miniature computers, for texting, surfing the web, checking email, etc. While we recognize that it’s more of a “Want” than a “Need” to be able to do all that, it’s incredibly useful since both my husband and I travel regularly for work. The prepaid plans aren’t as good for that type of usage.

  14. Jennifer says 05 May 2009 at 05:54

    I switched to a prepaid Tracphone a little over a year ago. On the one hand I love not having a monthly payment. I don’t use my phone often. It works for me right now.

    There are some drawbacks I have found though. The battery does not hold a charge and hasn’t for 6 months or more. Of course since I bought my cheap phone at Walmart there is no warranty or anything to get this taken care of. I charge the phone fully, don’t even use it and within a couple of days it is dead. I have to stay on top of charging it frequently.

    Also, when I purchase minutes I am only adding 3 months of service. So every 3 months I spend $20 or so to add minutes that I don’t even need just to keep the phone active. A pain. But in order to get more time added I have to buy a much bigger minute card (that I don’t need) that is more expensive. Plus with a prepaid phone, there aren’t a lot of features. I think you can get nicer phones than what I bought, but still can’t get all the features of other phones. This is fine with me, but something for you to consider.

  15. Beth @ Smart Family Tips says 05 May 2009 at 05:57

    I bought a Tracfone prepaid phone and minutes for my grandmother and it’s been perfect for her. It was less expensive than adding her to the plan I have and it fully meets her needs. We’ve considered switching our phones to prepaid, but like J.D., we’re in the middle of a contract with our current provider.

  16. Caesia says 05 May 2009 at 06:03

    The problem is that most cell phone companies will not let you switch to prepaid AND port over your old number. Additionally, most of them make you buy a new phone as well, from a very limited selection. I think prepaid is a great idea, but the providers do not make it easy to transition!

  17. rdzins says 05 May 2009 at 06:08

    I just went to a net10 phone, I found all of the plans that I looked at start at 50.00 dollars a month(plus sign there 2 year contract, no thanks!), I really don’t use my phone enough to justify 50 dollars a month for service along with the taxes, I figure for me it can cut my cost in half. I like the plan because it is straight forward and you pay for what you use, if you need to talk more one month obviously it will cost more but if you don’t use it, it costs nothing. It is also a way to keep yourself from accidentally going over your plan minutes and getting a huge unexpected bill. I have known a few people who received 500+ dollar phone bills after adding kids to there family plan. Not something that I am up for.

    I figure most months I will not come close to spending the 50 dollars for the plan which would be 500 minutes, so I guess this works for me, but may not work for everyone.

  18. Mama Bird says 05 May 2009 at 06:09

    We switched to prepaid a number of years ago and pay about $15 a month vs over $60 with our previous plan. Granted, we don’t use our phones that much, so it made sense for us. It wouldn’t make sense for someone like my Dad who calls his Mom and sisters all the time (long distance) on his mobile b/c they are on the same plan as him.

    We always buy a prepaid plan when we go to Australia every year for 3 weeks, so we have a phone while we are there. We just buy a sim card and put it in a old phone that his parents keep for us to use. It works out really well. Then his sister uses up whatever minutes we don’t use to help alleviate her outrageous mobile bill that she has every month. 🙂

  19. Courtney says 05 May 2009 at 06:16

    We just switched our cell service to pre-paid (stayed with Verizon though). It was a lot easier than I thought, and we got to keep our phones and numbers. I had run the numbers based on our actual usage over the previous 6 months and we’d be cutting our average bill in half – between the two of us we were using, on average, about 150 minutes of a 500 minute plan. We’re not big texters and we never use e-mail/web on our phones so it made sense for us. Most plans let you look up your usage online and you can calculate it out for yourself to see if the savings make sense.

    @ Coupon Artist (#5) – the length of time before Verizon’s pre-purchased airtime expires depends on how much you purchase at once. If you buy a $100 credit, for example, it’s good for a full year. I estimate it will take me about 4-5 months to run through $100 of usage, so it works. If you’re happy with Verizon definitely consider this.

  20. Ben says 05 May 2009 at 06:17

    As others have mentioned, pre-paid is great if you don’t use your phone that much. I switched over to T-Mobile a couple of years ago and it’s been great. $100 gets you 1000 minutes that don’t expire for a year. I’ve been going about 9-10 months between refills keeping my yearly phone bill well under $200.

  21. B.W. says 05 May 2009 at 06:19

    I switched to T-mobile prepaid, bought $100 worth of minutes up front, got my phone free after rebate. That got me 1000 “points” basically – both talking minutes and text messaging fees reduce the pool of points, and they last 1 year. The 1000 easily will last me the full year which has lowered my cell bill to $8.30 a month – down from $44 on Verizon. I strongly recommend switching.

  22. SG says 05 May 2009 at 06:22

    I’ve used a Virgin Mobile PAYGO phone for years, first in the UK and now in the States. The UK Virgin Mobile plan was much better, in my opinion, because it allowed me to do limited Internet browsing through my phone at the same rate as my usual per minute calling cost — to check my e-mail through the US phone, I’d have to buy an extra ‘Internet package’. I could also make international calls with my UK phone, which I can’t do with my US phone — and the UK phone minutes don’t expire, again unlike my US phone.

    Then again, PAYGO services are a lot more competitive in the UK (or rather, anywhere that isn’t the United States). It’s easier to find a better deal overseas.

  23. Lauretta says 05 May 2009 at 06:24

    A prepaid phone costs me about $80 a year since I mostly use it when I’m on day shift and I need an appointment or whatever and can’t be home to call. I’m not much on phone gabbing so Tracfone is just right for me.

  24. Joey says 05 May 2009 at 06:31

    My family has used prepaid for at least 5 years now. So much cheaper than a regular monthly.

  25. RhylanB says 05 May 2009 at 06:37

    I ended my contract with Verizon after too many instances of charges I nor they could explain. I had $39.99 plan that constantly ran me over $50 and $60. I signed up with Virgin and no longer worry about my bill each month.

    I realize with Verizon I was making calls just because I had the minutes not because I needed to and still had 300-400 remaining. Now I have plenty of leftover minutes and they actually rollover!

  26. Chris from St. Mary's says 05 May 2009 at 06:39

    I’ve only ever used pre-paid. I use Virgin Mobile. I don’t have a landline now and for my usage, I found it cheaper than either a landline or a contract. Virgin does have monthly plans. I switched to that about 2 1/2 years ago when I moved and ditched my landline.

  27. Nikc says 05 May 2009 at 06:42

    Thanks for doing my research for me. I’ve been thinking about looking into this for a few months now. Seems like a good way to personally protest all the iphone/blackberry hoopla that everyone is subscribing to these days.

  28. Ann says 05 May 2009 at 06:42

    My husband & I switched to Net10 two months ago. We used to have a plan where we shared 500 minutes a month & we barely used half of those. We’ve dropped our cost from about $90.00/mo (after taxes, fees, extra charge for texting plan, etc.) to $30.00/mo. We were able to port our numbers with us, so nobody knew the difference. They work great (although when I’m wearing a headset working & the phone is on my desk, I can tell when a text is coming in because I get some strange static on the headset. Weird.)

  29. Dangerman says 05 May 2009 at 06:44

    “I’m in the middle of an iPhone contract with AT&T but I generally don’t come anywhere close to using all of my 450 monthly minutes.”

    You can actually switch to the 200 minute “Senior Citizen” plan for $10 less a month, if you ask nicely enough. ATT let me do it yesterday, although I had to call twice in order to get a nice enough customer service rep.

  30. Matthew says 05 May 2009 at 06:45

    I use a bit of a unique system. I was able to get a GrandCentral number back before Google bought out Grand Central and re-branded it into Google Voice. This allows me to give out one number that will ring all my phones, including my Net10 phone, my MagicJack VoIP phone, and my work phone. I use the VoIP phone whenever I’m at home, and the work phone whenever I’m at work. This allows me to minimize my cell phone use, which is the costliest portion of that setup. It’s a little bit of hassle to get all this working together, but its worth the savings. Unfortunately, Google Voice isn’t open to everyone yet, so not everyone can use this setup, yet.

  31. Jane says 05 May 2009 at 06:47

    I also have Virgin Mobile. I used to have AT&T (Cingular) and I rarely if ever used the phone. When I went to cancel it, the customer service rep didn’t even try to convince me to stay, because it was obvious that I was wasting my money and probably paying upwards of a dollar a minute on my plan.

    Yes, I think the calls on Virgin Mobile end up being around 40 cents a minute and you have to top up your account every month, but it still beats a plan for someone like me who only wants a phone for occasional calls and emergencies.

  32. Todd @ The Personal Finance Playbook says 05 May 2009 at 06:50

    This is something I’ve thought about for quite awhile now. My contract is up in July and I will think about moving then. My wife and I have a family plan that ends up being pretty affordable compared to the plan I had before we went family, so that will make the decision a little tougher. I definitely see how a prepaid plan could save money.

  33. Kelly says 05 May 2009 at 06:58

    My Mom and I switched to AT&T GoPhone over a year ago. We both had regular AT&T contracts and neither one of us used our phones much, so we each paid @$35 per month to talk for maybe 10-25 minutes. Ridiculous! Now we buy $25 blocks of time that are good for 3 months and the extra rolls over when we buy the next block. Unless my phone usage suddenly rockets, I don’t see that I’ll ever go back – it’s just too much wasted money.

    For anyone who wants to know, there are two options on how to do the pre-paid phones with AT&T. You can have a $1 fee for each day you use the phone with each minute costing $0.10, or you can just pay a flat fee of $0.25 per minute. I’m on the $0.25 per minute plan, since I keep my phone calls short and sweet.

  34. Jason says 05 May 2009 at 06:59

    I’ve been perfectly satisfied with Virgin Mobile since ’04 … and saved literally thousands of dollars at this point. I use the phone very occasionally and send a few text messages from time to time.

    My “bill” ends up being under $10/month most of the time.

    Whenever my phone dies I’ll likely look into another handset that will give me some Internet browsing capability. There are a few occasions where having access to mail, mapping service or google would have been very handy, but they aren’t so common that I can justify $40-80/month for a smartphone and data plan.

  35. Kevin L. says 05 May 2009 at 07:00

    I’ve been using T-mobile prepaid for almost a year now and I haven’t looked back. I put in $100 and it normally lasts me about 6 months. I only use the phone for emergency. All my friends and family stay connected via Facebook, email, web chat, Google chat, etc. There is no need to chat on the phone.

    I have to say I’ve been fighting back on getting an iPhone. I am looking at getting an iPod Touch instead, but keeping my existing prepaid mobile.

  36. Toby says 05 May 2009 at 07:12

    If you go pre-paid, do not become a minute miser! I have relatives who are on pre-paid mobile and they go around asking to borrow other people’s phones. Their excuse is that they pay per-minute. It would be different if they were retired or something but they are not and I can’t tell you how annoying it is when I get put on the spot like that.

    I can’t go pre-paid because my cell is my only line and I need to maintain a data connection for work. But that doesn’t mean I have unlimited minutes…I still pay for mine.

    So remember, if you go pre-paid it is not a license to bemoan the cost per minute of your cell phone service and ask other people to foot the bill for you.

  37. Steve says 05 May 2009 at 07:12

    My wife and I switched to prepaid after our contract was up in August. So far, we’ve averaged about $32 a month for two phones with Net10, compared to our former carrier’s least costly family plan at about $85 a month with taxes and fees. Now the only taxes we pay are sales taxes on the minutes we buy.

    It took a few days to port our existing numbers, call quality has been good (Net10 uses/leases T-Mobile’s network in my area), and we haven’t looked back.

  38. Elizabeth Sue says 05 May 2009 at 07:20

    I have a T-mobile pre paid phone. I paid $100 for 1100 minutes and $20.00 for the phone. There was no activation fee and my minutes are good for one year. I can check my balance online. It is great. It works for my lifestyle as I am a homemaker and stay at home mom. I only need the phone for emergencies or to take with me when my daughter and I go walking. I love it and recommend it to anyone who doesn’t really need a cell phone for daily use but just to have one in the event of car trouble or a power outage in thier home.
    Great post JD!

  39. KC says 05 May 2009 at 07:21

    I’m a low volume user – I basically only turn my phone on to use when I need to or if I tell someone to call me. I’m tied to my landline because I can’t stand to carry a phone with me EVERYWHERE I go, including everywhere in my own house. I find it terribly annoying. So I keep my landline and I go with Virgin Mobile for my cell phone. Its the price of the phone, plus at least $20 each quarter and the minutes do roll over as long as you activate the next $20 before the end of your quarter.

    I buy a $50 phone (there are cheaper ones) about once every 3 years. So my total cost is about $118/year for a cell phone. It works great for me.

  40. Phil says 05 May 2009 at 07:24

    I usually send 400-600 texts a month, so prepaid isn’t for me.

  41. Holly says 05 May 2009 at 07:28

    Don’t know if this would work for us…husband uses his phone day and night and 13 y-o daughter texts and uses hers as well, though only a quarter of the time that my husband uses his! Because of his ‘habit’, we wouldn’t benefit from pre-paid. Plus, I have a 12 y-o sons who’s now bugging for a phone as well. Next we’ll be adding the data portion of the plan for an extra $15!! UGH!! Can’t stand it– Between the cells and cable t.v., technology is sending us to the poor house! I’ll be making the kids gets part-time work ASAP!

  42. J.D. says 05 May 2009 at 07:35

    @Holly (#41)
    I don’t have kids, so take what I’m about to say with a grain of salt…

    I do not get the “kids and cell phones” thing. For so many kids and young adults, it’s become an expectation that they’ll have a cell phone. I think it’s crazy. However, I think you’re on to something. If your children want a cell phone, make them earn it through a job. This seems like a perfectly fair exchange. They spend their summer planting cauliflower, they earn enough money to pay for a year of cell service. (I use the cauliflower example because that was my first job…)

    I know I probably sound like a grouchy old man on this one, but I don’t understand how cell phones have so quickly become a Need for kids and young adults. My 9-year-old nephew has one!

  43. Michele says 05 May 2009 at 07:37

    I wrote a post a few months ago on the benefits of prepaid phones. I’ve had both Virgin Mobile and T-Mobile and they have saved me hundreds or even a thousand dollars or more over the past several years. They are great!

  44. Eric Stringer says 05 May 2009 at 07:38

    I switched to a TracPhone about 6 months ago and I love it. I don’t use very many minutes and I dont use any multimedia/texting so it is perfect for me. I bought one of the phones that comes with double minutes for life (not hard to find). No camera…just a phone, just what I want. I have only had to buy 2 minute cards ($20 each with 90 days service) since I have had it. So $40 for 6 months is about $6.66 a month (I did pay like $25 for the phone too, and it came with a few minutes and a months service or something like that). I also get great reception / call quality. I am very pleased with my phone and the savings. I recommend pre-paid to everyone who doesnt talk alot or need multimedia.

    If I want to talk for a long time I use my landline. Yes I still have one. I use the “Community Caller Plus” plan that Verizon offers, and pay less around $26 a month. The plan is unlimited as long as you are calling in your area. If you call far from your town (but not quite long distance) then there is a per minute charge. Luckily NONE of the numbers that I frequently call have the charge. Oh yeah, no caller-id /call waiting or any other bells and whistles either. Doesn’t bother me. Never had caller-id growing up and besides, I like the suprise when I answer :). So far as call-waiting, if my landline is busy, people know to call my pre-paid phone (poor man’s caller-id LOL).

    So for about $33 a month I can make calls on the go if I NEED to, and I can talk at home as much as I WANT. I think that’s a good deal.

  45. lisa says 05 May 2009 at 07:39

    I had a Tracfone, and had bad reception most of the time. Tried a contract with US Cellular, and had bad customer service there. I’ve been on T-Mobile pre-paid service for about 4 years now and love it. Great reception and customer service

  46. dan says 05 May 2009 at 07:45

    One thing to keep in mind is that many young adults do not have a landline and use their cell phone all the time instead.

  47. Tammy Lee says 05 May 2009 at 07:49

    When I needed a cell phone for my business I bought a used Razr for $50 and bought a $100 Pay as you Go prepaid minutes card.

    If you buy $100 worth of minutes at a time they don’t expire for a year! (Smaller denominations expire within a month of activiation.)

    I’ve had my phone for a year now and I’ve spent $200 on minutes and there is still $90+ dollars on my phone.

  48. deb says 05 May 2009 at 07:56

    I totally agree with JD on the “kids & cell phones” thing. We have 2 teen boys. One has a Virgin Mobile PAYG and the other T-Mobile PAYG. They both bought their own phones and pay for their minutes with allowance or job $$. There is no other option, both my husband and I have T-Mobile PAYG too. Even my businss phone is PAYG Tracfone (it’s not a big phone need business). In all with the 5 cell phones it must come to $35-$40 a month. We got rid of our land line and have a VOIP phone with our cable company that is $15 month. So our grand total for 2 teens, 2 adults, 1 business, both home and cell phones is $55 a month at the most – not bad. I must add we’re not gabby phone attached to the ear type people.

  49. Jason says 05 May 2009 at 07:57

    J.D. — phones for kids are doable now because they are relatively cheap and provide a useful function. Pay phones aren’t as ubiquitous as they once were, and there are several on the market that will allow only a handful of pre-approved numbers to be programmed in to make and receive calls to.

    I do agree, though, that a prepaid phone would be a good tool to teach children about how to budget, and I’ll likely look into it when my daughter is old enough. Of course, by then it’s likely that mobile service will be (a low) flat-rate for unlimited talking pretty much anywhere, very similar to how land lines are nowadays.

    Of course, kids also need to learn some responsibility, too — like being home at a certain time, letting the parent know where they are going, etc. The phone doesn’t remove that requirement from them.

    And there are any number of OTHER technical advances that seemed “out of reach” for kids in the past — cars, radios, tv’s, video games, computers, MP3 players, etc. But tech keeps getting cheaper and cheaper, and making things like 3-4 computers in a household using one network feasible. Think how impossible and outlandish that would have been in 1985, or even 1995!

  50. Jennifer says 05 May 2009 at 08:27

    I, like many, have thought about using a pre-paid plan but have been hesitant because of the catches many come with. Even though I want to lower my current plan, I have not because I do not want to be in another contract. I would love to see you do an article comparing cable, satellite, vs usage of playon with hulu/joost/etc. This is another area in which I would love to make a change but it seems technology in the US is not quite there yet. I could save a ton with satellite vs cable but do not want to enter into a two year contract.

  51. Craig says 05 May 2009 at 08:31

    Does prepaid phones work for text plans as well? I always have so many minutes left over on the smallest plan every month, but use and need the unlimited text plan.

  52. Brad @ Twenty Something Sense says 05 May 2009 at 08:39

    Great post. People often forget how much monthly subscription fees can add up over the course of a year or a longer contract. Traditional cell phone plans can run upwards of $1,000 a year, which surprisingly to most is their biggest single purchase of the year.

    I wrote about the monthly subscription phenomenon at:

    http://www.twentysomethingsense.com/2009/02/monthly-subscription-fees-add-up.html

  53. Kam says 05 May 2009 at 08:42

    The timing of this post coincided with an article in the NYTimes about how prepaid phones are becoming more popular and may bring down prices of contract-based plans (which would be for me awesome if that actually happened). Here’s the article: http://bits.blogs.nytimes.com/2009/05/05/more-signs-of-a-coming-wireless-price-war/?partner=rss&emc=rss

  54. Moneyblogga says 05 May 2009 at 09:11

    Thanks for this post JD. Our cell phone bill is one of our highest bills and I’m pretty sure now that for me, personally, MagicJack for the landline and a prepaid cell phone could be a good way to go.

  55. Kasy Allen says 05 May 2009 at 09:19

    Thanks for the post. My husband and I cancelled one of our cell phones at the beginning of the year, which was strictly a money saving descision. Now our other cell phone plan is up and we don’t want to resign a contract, but the tempation of a free phone is always enticing! I’ll have to look into Mr. Karp’s post on the prepaid phones… I like not being tied to a contract and saving money at the same time!

  56. partgypsy says 05 May 2009 at 09:28

    We only got cell phones at the insistent of our parents. I wanted the lowest price but still good reception. I got T-mobile, 2 phones with 1000 minutes on each. The minutes do not expire for a year, and whenever you add minutes it extends it a year, set up for 2 phones $300 and should last us a year. Thereafter 10C a minute to reload (and can be even a little cheaper if you know where to look)

  57. Melissa says 05 May 2009 at 09:35

    I text and talk to clients way too much to go pre-paid, but something that worked well for me was finding an employee who could refer me to their friends/family discount plan. My cell phone bill dropped from $60/month to $35/month with unlimited data transfer, texts, and more minutes than I need. MUCH better! Can’t really recommend how to find an employee to be your friend, though… with that I was just very lucky.

  58. Santosh says 05 May 2009 at 09:37

    My wife and I switched from a T-Mobile wireless family plan ($80/mo) to T-Mobile pre-paid phone cards in August 2008. We have not missed the family plan at all.

    There were times when I thought of getting back onto a plan but it just doesn’t make any sense. The contracts are too rigid and expensive to keep (and to get out). Worst case scenario – I’ll pay the same $80 per month for us and still come out ahead with the freedom to quit anytime I want.

    As of now we spend about $20 between our two phones with no restrictions on our usage.

    We also have MagicJack for our home phone and that’s $20/yr. No wonder I was shocked when my colleague told me that he managed to “cut-down” his family’s phone bills to $220/month. Yup, they have iphones and other fancy gadgets.

  59. Dan says 05 May 2009 at 09:43

    I switched to a pre-paid phone with T-Mobile and I am saving about $1000 a year for my phone and my wifes.

    The reason why I did it was because I was sick and tired of getting calls on my cell phone when I’m in the office and not travelling. Clients would call me on the cell because it was easier and guaranteed. So what I did was transfer my cell phone # to a VOIP account that has unlimited incoming calls for around $5 a month. I have this number forward to my office number. Clients don’t realize that they are calling my office line and when I am actually traveling and need to get calls I simply change the forward to go to my new pay as you go cell phone. This works out perfectly for me.

  60. Meredith from Merchant Ships says 05 May 2009 at 10:13

    We have used prepaid cell phones for the last few years. He’s right–it’s a great savings.

    We recently had to switch my husband over to an ATT wireless phone, though. When he began to manage 100+ people, their incoming calls were eating up minutes faster than we could recharge.

    For emergency or occasional use, as my phone is, prepaid is great, but not if you can’t control the amount of usage within your own family.

    (We ended up getting a bundled plan that puts a home line, high speed internet, and unlimited wireless through ATT at a rate that saves us on all of it.)

  61. frugalscholar says 05 May 2009 at 10:21

    An advantage of prepaid cells also is that you talk on the phone less. My whole family has them btw, including two away at school kids.

  62. Ann says 05 May 2009 at 10:24

    I agree with JD’s “kids & cell phones” comment. We have gone prepaid (see #28), but our 15 yo daughter is on a family plan with my sister & has been so for almost 1.5 years. The 13 yo daughter is getting ready to get a phone. Both have been babysitting on and off for the past two years. Now they have also have dog-sitting job every day after school for neighbor’s dogs & babysitting will become more regular when school gets out & they will be watching two 6 yo three days a week. If they want a phone, they pay for it. We weren’t going to let them get cell phones to begin with. They were told “when you’re old enough to sign a contract, then you can get a phone.” They were fortunate my sister let them add on to her plan. We agreed to it only if could show they have the means to pay their monthly bill.

  63. Tyler Karaszewski says 05 May 2009 at 10:28

    On the topic of cell phones being listed as a “need” — in modern society, I think a telephone can be reasonably called a need. Try sending out resumes without a phone number on them and see how many companies call you back for a job interview.

    But, the particular type of phone you need is immaterial. I don’t see why people still view a landline phone as a need, unless they live in the mountains or somewhere else with no cellular reception. You need a phone, the type of phone you get doesn’t matter, as long as you can receive phone calls.

    I have never owned a landline phone in my life. Cell phones are pretty much better in every way, and around the world, many people who could never have a phone before, because running the wires for landline phones was so expensive, now have a cell phone as a first phone. Look towards India or Mexico.

    A cell phone is not some luxury-model phone, it’s now the standard type of phone, with the landline phone quickly going the way of the typewriter.

  64. Eugene Krabs says 05 May 2009 at 10:36

    Ah, I carry a Tracfone. My phone bill last month was about $2.70. Yes, I don’t use a whole lot, but that’s also why a pre-pay phone makes so much sense for me.

    I’ve been evangelizing this for quite a while myself, but I’m glad I’m not the only one.

  65. NatalieMac says 05 May 2009 at 10:36

    Prepaid plans are definitely a big cost savings for low-volume users. I saved a ton of money on cell phone fees when I switched from a contract to a pre-paid service. Since then, I’ve decided to give up a land line, and my cell phone is my only phone, so I’m back on a contract.

    The biggest hassle was that prepaid cell phones don’t have the same rules as contract cell phones, so you don’t get to keep your same phone number.

  66. Johan Ericsson says 05 May 2009 at 10:38

    +1 recomendation for Page Plus.

    This prepaid service uses the Verizon network. You can activate any Verizon phone on it.

    At 6cents per minute, it is cheaper than many contract plans.

    I’ve been using them for a couple of years and have saved hundreds of dollars with them.

    There is a vibrant user group at Howardforums.com for Page Plus.

  67. Cathy says 05 May 2009 at 10:41

    Prepaid was definitely the way to go for me. For my usage, I couldn’t downsize. It wouldn’t save me any money. I highly recommend T-mobile’s pay as you go plan. Incredibly low hassle, and they give you 10% bonus minutes for paying for a 1000 minutes. The minutes don’t expire for a year, which is much better than many other competitors.

    I wrote about why I decided to switch here: http://rainydaypennies.net/2009/04/saving-money-on-mobile-phones-pay-as-you-go-plans/

    I’d love to have an iPhone, but I don’t want to pay for a contract plan again. I like the prepaid so much better. I hope the growing popularity of prepaid plans will make the mobile phone companies drop the restrictive contract plans.

  68. Anne says 05 May 2009 at 10:45

    Kam in #53, I saw the same article this morning. It’s really interesting!

    I use my cell as my only phone and have been quite happy with Sprint for the last 8 or 9 years. Like JD said the biggest barrier for me is understanding what’s different. My monthly bill is only $35 and I get nice benefits like unlimited nights, unlimited after 7 p.m. (Sprint is the only carrier left that lets you buy that down).

    The Bits post this a.m. helped a little, it looks like Sprint’s prepaid phones are on the Nextel network almost exclusively. I really hope as prepaid gets more press that it’ll be easier to understand the nitty gritty (not just price) differences between contracts and prepaid.

  69. The Happy Rock says 05 May 2009 at 10:53

    I will put in a vote for Virgin mobile. We dropped our bills from $400 a year for one phone to about $200 a year for two prepaid phones at Virgin mobile. We ARE low minute users though. I think when I did the numbers last that the breakeven for prepaid being worth it was just around 200 minutes a month.

    Here was my article from a while back where I did the prepaid calculations.

  70. wolfgirl says 05 May 2009 at 10:55

    We dropped our landline several years ago. Having a cellphone is required for many of the contracts my husband does. A laptop computer is quickly becoming a requirement also.

  71. Amber says 05 May 2009 at 11:07

    For those who are interested in prepaid but are really heavy text/internet/email users, maybe consider getting a Sidekick from T-Mobile. They do a prepaid plan that is unlimited everything except minutes for $1/day. So thirty bucks a month if you don’t use minutes.

    I had it for a while and absolutely loved it.

  72. DebtGoal says 05 May 2009 at 11:12

    I still meet individuals and even families that use cell phones in conjunction with land lines in their private homes. Why not just get rid of land lines completely? It’s extra money going out the door each month.

  73. J says 05 May 2009 at 11:13

    I disagree about the “kids and phones” comment, mostly because I can’t imagine doing everything I did in high school without either a cell phone, or parents that were lenient to the point of neglect. I went to a high school that was far away from my home, and took the subway so I needed to be picked up at a slightly different time every day. I was also involved with a million activities that were scheduled on a complicated schedule, so it was much easier to let my parents know that I wasn’t dead in a ditch somewhere with a cell phone rather than searching the streets for a payphone, or mooching a phone off of a friend. On the notes of prepaid phones, I had one of those back in 01′-02′ ish, and it was simply not as good as a phone with a plan. Everytime I made a call I had to listen through a very slow pre-recorded message telling me how many minutes I had left (which used up at least a minute!) Do prepaid phones still do that? It was really a waste of time and minutes. Also, I could not keep my number when I switched to a plan, even keeping the same provider.

  74. Chris says 05 May 2009 at 11:16

    I bought a used 2G iphone on eBay ($200) and paired it with AT&T’s prepaid (pay as you go) plan and Medianet package and I’ve used about $60 total in the last 6 months for both voice and data. (It’s an unlocked/jailbroken iPhone). I really don’t talk or use data much, but it’s nice to have maps and email checking (which doesn’t use much data if you don’t download attachments) wherever I am.

    I figure I pay AT&T between $100-200 on my cellphone needs per year (not including the original iPhone purchase), which is better than $400-600 normal plans charge and my costs totally depend upon how much I use it, which seems like the way it should be.

  75. Avistew says 05 May 2009 at 11:20

    After 5 years of cellphone, I stopped having one altogether. It’s been 3 years now.

    It surprises me how everyone around me keeps telling me “why don’t you get a cellphone? You NEED one!”.
    No, I don’t need one. Emails can replace text messages (not to mention that text messages can be sent from the internet towards cellphones), I have a landline, and phone booths are still around for emergencies.

    If I (or my husband) was to get a cellphone again (well, not “again” for him. He’s never had one. Never had a car either, and he’s not French like me, he’s Canadian), I know I’d go for prepaid. I can’t imagine ever getting one again right now, though. If I do, it will definitely be a want, and… I just don’t want one.

  76. Daniel Drew says 05 May 2009 at 11:36

    I find pre-paid cell phones to save a little money. However if you want to have unlimited calling and text ing Cricket is a great deal. The only issue that I have with Cricket is that it drops the most out of all the carriers. The other best deals I have found are those you get when you combine your cell phone, home phone and internet etc.

  77. Ulrike says 05 May 2009 at 11:40

    I’m on T-Mobile Prepaid (pay-as-you-go, not pay-by-the-day). The first year is $100* to get to the Gold level, which keeps your phone active for an entire year, no matter how little you use it. After that, you just have to add at least $10/year to keep the phone active for another 365 days.

    Their cheapest Nokia phones are $20 and come with a $25 Pre-Paid Card. Those phones don’t have a lot of features (no built-in camera), but they’re very sturdy. My husband abuses the heck out of his, and it still works fine.

    ETA: I noticed a couple of other questions since I posted. No, current plans don’t give you a recorded message wasting your time telling you how much time you have left. If you want to know that number, you can call them (free) or check your account online.

    Also, a friend of mine recently switched to a G1 phone http://www.t-mobileg1.com/ with her T-Mobile prepaid. She switched the Sim card from her old T-Mobile PAYG phone, and the G1 works fine. She only gets internet access if she’s somewhere with WiFi, and that way she’s not paying per minute to check her e-mail. If I could justify the cost of a G1, I’d be all over that. 😉

    *Note, you don’t *have* to pay $100 the first year, it just works out to a lower long-term cost if you do.

  78. mary b says 05 May 2009 at 11:57

    Another T-Mobile pay as you go user here! I switched from Nextel & was able to port my number with no problem.

    I buy the $100 cards just about once a year, so it works out to $8-10 a month.
    I don’t really give out my cell # to anyone except for my children’s emergency contacts, so the only regular calls I get are from my husband.

    If I had great service at my house I’d have dropped the home phone too in order to save more, but we are too rural, so we maintain a voip phone.

  79. Sally says 05 May 2009 at 12:05

    Re: comment 73

    No, my pre-paid phone doesn’t make me listen to a recording of how many minutes I have left every time I make a call. That info is on the main screen, along with the date my service will expire if I choose not to renew it. (I have Net10.)

  80. Terrin says 05 May 2009 at 12:11

    My friend is using his unlocked iPhone on a T-Mobile prepaid SIM. It works great. Better then it did when he used it on AT&T. That probably has to do just with T-Mobile having better service coverage where we live. Of course, he relies on Wi-Fi for data because the prepaid card doesn’t offer that.

    Myself, I use T-Mobile prepaid and Vonage. I myself can’t switch to just a cell phone as the talking experience isn’t as comfortable and I am perceptive to the radiation and often get headaches.

    You wrote, “One thing, I don’t think you could use a prepaid setup with a data plan so your Iphone may not work with prepaid, not sure about that.”

  81. Tonya says 05 May 2009 at 12:40

    Prepaid phones are great UNLESS you text a lot. We had prepaid for the last six years until my teenager and I started spending too many minutes on texting. Usually a text equals one minute. If you’re just making phone calls, you can usually fill about 20 texts worth of information in 1 minute of speaking, so it’s a better value. But the teenagers prefer texting.

  82. Rick Francis says 05 May 2009 at 12:57

    I have a prepaid cell phone that I’ve been very happy with from T-mobile. It’s great for me because I don’t use a lot of minutes. Personally, I don’t want to be on a cell phone leash, always available everywhere I go. I carry the phone but leave it off until I choose to call someone. I find I usually don’t need or want to call anyone very often.
    I bought the phone for around $50 a few years ago and initially got 1000 minutes for $100. I tend to use 500-1000 minutes a year. Any other plan would cost me a lot more without any additional benefits. I’ve never had a problem with signal strength either. It’s easy to check the # of remaining minutes- just make a call. When you want to refill- make another call and pay by credit card. You don’t even have to make those calls from your cell phone so it won’t eat up any minutes.
    -Rick Francis

  83. Tim says 05 May 2009 at 13:05

    I’ve been using NET10 for about 4 years.

    10 cents a minute, 5 cents a text.

    No monthly fees, buying 300 minutes ($30) adds 60 days of service (my current expiration date is Jan 2012).

    My parents got me a Nokia 1100 with $60 worth of minutes as a gift. This $10 phone has been with me for all 4 years (I recently replaced the faceplate, which set me back another $4).

    At first I envied people when camera-phones became big (I was in high school). Now I just smile as I watch everyone go through $100-$400 phones, chained to contracts.

    I might replace the battery soon. It used to last for 2 weeks on standby, but is now down to 5-6 days.

  84. AC says 05 May 2009 at 13:36

    Good article. Now I can make a wise decision.

  85. gaga says 05 May 2009 at 13:44

    I don’t know about the other countries you listed, but in Hong Kong, you don’t have to pay for incoming call or texts, so prepaid makes a lot more sense. You keep the number, anyone can reach you, even if you’re out of minutes, and you only pay when you make outgoing calls/texts. My main gripe about the US is that there is no way to block text messages and you get charged for receiving them. That doesn’t really seem fair to me…

  86. Johnny says 05 May 2009 at 13:48

    Prepaid cell phones usually save money for relatively light users. Heavy texters and people using the multimedia/web features on their cell phones probably won’t save any money switching to prepaid. I’ve been on prepaid for the last 6 years, and it’s perfect for me and my family. We only ever use our cells for keeping in touch when we’re away from home and for occasional text messaging. Right now, I pay maybe $30 a month between Page Plus and Virgin Mobile to keep 4 phones active.

    The best cell phone plan depends on usage pattern and carrier coverage in the area. I made myself a spreadsheet when settling on a plan, but I also referred to a premade table comparing a wide number of prepaid plans: http://www.cellguru.net/prepaid_compare.htm .

  87. Kate says 05 May 2009 at 13:58

    I’ve also thought off and on about switching to pre-paid phones, but my experience with the Virgin mobile plan through an old job really turned me off the concept. Since reception can be dicey in my area, it’s really important I use a plan that gets good coverage, so instead, I added myself to my husband’s family talk plan and am saving that way. It’s a little change, but we still save about $20 a month, and hey, that’s $2400 a year. A real example of The Power of Small at work!

  88. zach says 05 May 2009 at 14:01

    I’ve been using prepaid for the last few years as many above have posted. I think its great for me, but keep in mind that you have to pay full price for a mobile, and that can be expensive for one of those fancy ones such as IPHONE (if you could get it without contract). I suppose thats just an upfront cost that regain over time, so long as you do not get new phones every two years or so.

    Since I have moved abroad to Sweden, I love their pre-paid plans here…as all incoming calls and messages are free for me. Does not even matter if my parents are calling from California or what…its free to me. So even if I run out of money I can be reached. American phone companies being “competitive” and all should do something like that.

  89. S says 05 May 2009 at 14:23

    “I don’t have kids, so take what I’m about to say with a grain of salt…I do not get the “kids and cell phones” thing.”

    You will — when they get to high school and band practice was cut short or they need to stay late for honor society or….. (especially since our school district no longers offers late/activity bus service).

    My 14 yr old pays $20 a month from her allowance for UNLIMITED texting on Virgin Mobile. And you can send texts for FREE from your account via the Virgin Mobile website (sign in to your account first). Also, Virgin Mobile has a Service Preserver service – top up something like $90 total in the first few days and the service is good for one year – less than $8 a month.

    Check the website for free (refurb) phones. Virgin Mobil got us through 3 hurricanes, 1 tropical storm, etc….

    Love Virgin Mobile!

  90. S says 05 May 2009 at 14:35

    We keep our landline active, for less than $20 a month, as part of our hurricane kit. Landlines work even when the power/cell towers are out. Even have an old slimline phone for just such emergencies.

  91. Ross Williamsr says 05 May 2009 at 14:48

    My wife and I have only used pre-paid cell phones. I had nothing but problems with Virgin Mobile. The problem is that they are re-sellers. They don’t actually provide phone service, they just market it. So when they accidentally turned off my service when I returned a phone (because it didn’t work properly) they were unable to get back the number I had been using for over two years. I ended up having a phone number I had given out for my business that was no longer connected and had no way to even get calls forwarded.

    They did give me a new number to use with my old phone, but then shut that off when I didn’t “top up” – i.e. buy more minutes, even though I had paid for service protector service for a year that was supposed to eliminate the need to regularly add minutes. On top of that, they kept the money I had pre-paid (nearly $100) and never did refund the money for the bluetooth headset that I returned with the phone.

    But the real problem was not being able to reach customer service at all. After going through several menus to reach a live operator, their “cheerful 14 year old” recording finally told me a lecture on being “patient” and hung up. That happened several times.

    The only time I was able to navigate their phone system to reach a live operator was when they told me I was out of luck since they had shut off my service and couldn’t get the number back. I could never again repeat the sequence that got me to a live operator.

    I am now using Go Phone from ATT. They have better reception where I live than Sprint, which provides Virgin Mobile’s service. I look at annual plan costs and I really can’t imagine spending that much for a phone. But I don’t text message a lot and I don’t have kids I am tracking. Using pre-paid does require a different style, you think about each call. Its like having long distance phone service without unlimited minutes. The more you use it, the more you pay.

  92. friend says 05 May 2009 at 14:56

    Also with Virgin Mobile, if you don’t need the latest “cool” phone, you can go to Target or Best Buy and find a discontinued model on DEEP discount.

    I got my phone for about $8, and it’s still working great after two years. (I pay $90 for a year’s worth of service/minutes, so that comes to $94 or less per year of cell phone yse.)

    My current phone doesn’t have Internet, but that’s what I use my laptop for. (If I wanted Internet, I saw one on sale recently for $15 at Best Buy.)

  93. Wrinkly Dollar says 05 May 2009 at 15:10

    What a great article. Prepaid phones are something many people would gloss over as a way to save some cash.

    As for the iPhone, I wonder if there is a prepaid plan that allows you data access as well. (Seems like no one has answered that clearly.)

    For those not quite ready to make the prepaid jump, remember, most cell phone companies offer discounts to universities, governments, and private companies, so be sure to check that out too if you don’t already have the discount enabled.

  94. Jamie says 05 May 2009 at 15:11

    Thanks! We’re in the process of switching over. This helps!

  95. Dylan says 05 May 2009 at 16:12

    JD, nice article. A few words about pre-paid phones: first, as you point out, since pre-paid costs per-minute are often higher than traditional plans, I would argue that anyone worried their kids will overuse the phones should consider this fact in particular. Also, the main thing I would mention to anyone considering switching to pre-paid cell phones is that you should figure out first whether you can reduce your current cell bills down to acceptable levels–thereby saving often significant plan cancellation fees (AKA “early termination fees”), not to mention the convenience of keeping your present cell phone number. In this vein, I thought that I’d elaborate on a method for effectively reducing cellular expenses. Not to blatantly plug, but I work for the consumer advocacy website http://www.fixmycellbill.com, powered by a company called Validas, where we slash the average cell bill by 22 percent. It costs five bucks to implement our suggested changes to your plan (the average consumer currently saves around $450 annually through us) but we will analyze your bill for free without any commitment of purchase, just to let you know exactly how many dollars your carrier is ripping you off by. I could go on and on about how shifty these cell companies can be in their attempts to make you overpay. We stop them, and have currently put over $5,000,000 back in the pockets of consumers. You can check out Validas’s fixmycellbill.com in the national news media, most recently on Good Morning America at http://www.abcnews.go.com/GMA/story?id=6887412&page=1.

    Good luck to everyone reading on making an informed wireless choice.

    Dylan

  96. G.E. Miller says 05 May 2009 at 16:19

    Thanks for the plug, JD. Net10 has been great, and I can testify that switching to pre-paid has cut $30 off what was $60 a month for two cell phones. The caveat is that I wouldn’t have been able to do this without adding land line in the form of Ooma. Additionally, if you have a data plan, you might as well forget about prepaid. Here’s my review on the Ooma VOIP system that has no monthly charge (it costs ~$200 up front): http://20somethingfinance.com/blog/2009/04/02/my-review-of-the-budget-slimming-ooma-voip-system/

  97. MLR says 05 May 2009 at 16:26

    As someone who uses about 100 minutes per month but about 300 text messages… it probably wouldn’t make sense.

    But, I have considered it. If any pre-paid services offer cheap texting it would probably make sense, though.

  98. dreamin2u says 05 May 2009 at 16:32

    I’m amazed that no one has mentioned 2 phone services I’ve seen in the southeast..Metro PCS and Boost mobile. Both offer unlimited, texts, calling and browsing for about 50 bucks a month. Actually closer to 60 when you add taxes and fees. The advantages here are massive for extremely heavy users. The downside of Metro PCS is that it has a very limited coverage area. It’s only good in the city where you bought it. My daughter just switched to Boost so I’ll be letting you know in the future how that works out for her. She did tell me she knows a few people who have them and some use them so much they have to keep a spare battery. Anyway, it wouldn’t hurt for heavy cell phone users to check into Boost, especially if the do a lot of texting and web browsing too.

  99. Doug says 05 May 2009 at 16:55

    If there was a prepaid iPhone plan I would look into it. I cancelled my cable and Internet last year and only used my phone for everything. I had to reactive the cable when I was taking some online classes. It was cheaper to get the Internet and a hd converter than just the Internet.

    I have found the data plan to be extremely useful working in EMS. Street view has helped a lot in locating buildings. Checking the weather and hospital diversions, information dispatch often forgets to tell us. I wish I had a data plan when I was sent to Mississipi after Katrina, the ability to pay bills and check email would have been most helpful. Letting my family know i was ok helped them relax as well. Most land lines were gone and cell towers were instantly repaired if needed . The ability to send a distress text has helped more than one crew trying to stay quiet A smart phone may not be a need, but has made my work a lot easier.

    As for kids with cell phones I see it as a mixed blessing. They can be tracked by GPS or call for help, now that pay phones are practically history. On the other hand they can run up bills and ignore everything around them. I figure it best for parents to decide.

  100. Suzy says 05 May 2009 at 17:17

    That’s the only type of plan my family has ever used. It was a no brainer, because we don’t do a lot of calling. They offer us connectivity without the hassle of getting a bill.

  101. Suzy says 05 May 2009 at 17:34

    I forgot to say that the service we use is T-Mobile. Like others have said — it keeps you from being tethered to the dog gone thing! We still have our landline to allow for internet connections. I wasn’t born with a phone up to my head, and I want to keep it that way! 😀

  102. Meg says 05 May 2009 at 18:34

    I used prepaid when I studied abroad in France, and it worked great. Texts were cheaper than placing calls, and as other people mentioned all incoming calls/texts were not charged to you. Seems like it would be more expensive in the US, for the same usage.

    I wouldn’t consider it now, though, because between my family and long distance boyfriend I would end up paying far more than what I pay now, especially since everyone is in-network.

  103. jolyn says 05 May 2009 at 19:52

    Thank you so much for this post. Our contract is up in a couple of months and we definitely are switching to prepaid. We moved to Ohio from overseas and had prepaid in Europe: it’s a huge money saver for us. Unfortunately, when we moved back Stateside we didn’t realize they were available before we signed a contract.

  104. Lars says 05 May 2009 at 22:46

    A cautionary tale in favor of prepaid phones: a friend once had his cell phone (with a contract) stolen in the college cafeteria. In the two hour period until he noticed the theft and blocked the SIM card, the thieves had racked up a $700 bill with call to Africa. After negotiating the phone company reduced the charges to $350. If it had been a prepaid phone, he would had only lost the minutes he had on it at the time.

    Another tip for T-Mobile prepaid customers: dial #999# to see the remaining minutes on your display.

  105. Strabo says 05 May 2009 at 23:17

    Yes, as others have said, pre-paid is great if you’re not using your phone a lot. At least here in Europe you pay a bit more per minute than with contract phones, making it more expensive if you use it a lot. But then knowing you have only x amount of money on the card lets you think about which calls you make…

    Since I only pay 4 € per month for my subscription phone with half the price (4 cents per minute) compared to a prepaid it was a logical choice to use a contract for my moderate use.

  106. jonasaberg says 06 May 2009 at 02:10

    I must say I’m a bit surprised at how much it apparently costs in the US. People here are mentioning 15-20$ a month.

    My current plan costs me roughly 20€ for three months (that’s about 8,6 US$/month). By changing plans I also got a brand new phone for 18$ that would otherwise have cost just about 200.

    The plans offered here in Finland are apparently pretty okay price-wise.

  107. jonasaberg says 06 May 2009 at 02:15

    *Addition to previous post*

    That 20$ is including all text messages and calls as well. I’m only paying about 0,90$ in service charge per month.

  108. Wilhelm Scream says 06 May 2009 at 04:49

    Furthermore, when I had a contract I used to make a lot of stupid calls and texts just for the sake of it, because I knew I could. I seemed silly to let all those texts go to waste, so I used to forward bad jokes to my friends all the time!

    Having a PAYG plan might make you reevaluate how you use your mobile and whether or not your friend needs to know right now that you’re thinking of buying new shoes… The psychological impact of knowing you’re paying for each text you send is pretty big. Now I use my mobile a lot less. Between £5 and £10 a month worth of calls and texts combined.

  109. Dan says 06 May 2009 at 05:26

    I’ve been a user of Virgin Mobile prepaid for years. The coverage isn’t the greatest in the world, but because I don’t use a huge number of minutes it works well for me.

    The plan I’ve had with them for about 2 years now is their Month2Month plan. I pay about $35.00 for 300 anytime/1000 night&weekend minutes per month. They range all the way up to an unlimited plan. If you go over, the charge is $.20/minute.

    Best thing is you’re not tied to any contract. Just pay your monthly fee and use the minutes. No roll-over minutes, though. And no data plan either. Unlimited texting is an additional $10.99/mo I believe.

  110. sandy says 06 May 2009 at 06:34

    My husband has a cell plan paid for by his company, as he does a lot of international calls that our family doesn’t need to pay for.
    For me, I’ve had the same basic Nokia phone for the last 8 years, and it still suits my needs. I’ve been prepaid for the past 5 years. $100 per year for service in case of emergency or the odd call from one of the very few who have my number and school emergency. Last year, it was time for my daughter to get one, I started checking into family plans, and was absolutely floored at the $80 or $90 per month fees. That’s over $1000 per year! So, I told my daughter that we would do the same for her and get her $100 for the year, and if she goes over the minutes allotted, she’ll be responsible for them herself. Likewise, texting costs $5 per month, and I told her she could get it, but she would have to pay for it herself. Well, I guess she didn’t see it as that important.
    I’m sorry…but I’m trying to save for college for my girls…that extra $1000 per year(which would come to $8000+interest over 8 years) will go much further in her education than being able to text someone at any point day or night about…what? Whether she should get a pair of shoes or not?

  111. Keith says 06 May 2009 at 08:51

    I’d like to point out that pre-paid isn’t the only option. Some companies buy wholesale minutes from the major carriers and resell them to customers without long-term contracts. This way, you can still do post paid without a contract so you can change your plan as often as you need to. I work with Consumer Cellular and they also offer discounts to AAA and AARP members.

  112. moneytip says 06 May 2009 at 09:06

    In the list of prepaid plans you provided you forgot AT&T. I switched from their contract plan to a pre-paid ‘Go Phone’ and they let me keep my AT&T number. Their customer service was great.

  113. db says 06 May 2009 at 11:13

    I haven’t gone to a pre-paid cell phone yet (though I’ve looked at it), but I still might in the future. I’m in the telecom industry and so I get a discount rate on my cell service.

    However, I wanted to address a few people above who questioned why to even keep a landline. IMHO, a landline is essential for safety, a cellphone is not. People don’t realize how vulnerable cell service is to disruption. A catastrophic natural disaster could easily interfere with signal transmission, and military systems can target taking out wireless transmission systems.

    Landlines aren’t invulnerable either, but they are more secure. They can also be virtually free when bundled with broadband services, which I think will kill off cable over the next decade.

  114. allen says 06 May 2009 at 12:57

    what i’d like to see is a way to keep my current phone number (a cell number I’ve had for YEARS now), while being able to try these other, cheaper, options. It’s not worth the pain of my grandmother not being able to get a hold of me, to save me three dollars a month.

    Like, i’d love to combine Google Voice (which has free out-dialing, and free in calls now) with a prepaid phone (which my friend did, where she gets to assignee one number that it’s free to get calls from… that’d be her Google Voice #), but only if i could transfer my cell number over to it (once my contract is done, of course).

  115. Dave Farquhar says 06 May 2009 at 14:07

    My wife and I have one prepaid phone and one contract phone, both with T-Mobile. Calls between those two phones don’t cost any minutes, since they’re both T-Mobile phones. We couldn’t quite meet our needs with two prepaid phones (a shame as that really would have saved us a bundle), but at least this way we save something. The second phone ends up costing less than $10 a month. That really beats paying $30 a month for a phone that only gets used 1-2 days a week.

  116. steve in w ma says 06 May 2009 at 15:26

    I use Virgin Mobile (20 cents per minute plan) and last year put $100 in my account , which keeps it active for the year. I have two months left in the year and still am on track to only use $100 in the entire year. I plan on doing the same thing in July when my time runs out. I’ll get any minutes/money left over in my account, plus the $100 I put in , and it will stay active for a year.

    I use the phone very little, and always check my messages from a landline to avoid being charged 20 cents per minute, but when I need or want it it’s there and doesn’t cost me a mint.

  117. cheap chick says 07 May 2009 at 06:54

    I dumped my land line last year and now have only a cell phone. But I went a step further and got a Tracfone and pay upfront for use. It’s much more cost-effective and the service is fine.

    The only reason I’d kept my landline was to send faxes but I do that on the Internet now, so who needs a landline?

    Plus I have no contract anymore for my phone and the quality is great.

  118. Jen M. says 07 May 2009 at 06:58

    I want to preface this by saying that it’s going to sound like an ad, and I apologize, and I do NOT work for T-Mobile. I’m just a very happy customer.

    I switched from a plan to pre-paid, I think, about 4 years ago. It was really easy. I called them and said I wanted to switch. They said “no problem,” and I was even able to keep my number. Their customer service has been great for me.

    I switched, because I got mad every time I looked at my bill at all of the added taxes and fees. It almost doubles the bill! I said “no more” and took control of my finances back.

    I will probably stay with pre-paid, even when I start using my number for my business. I don’t anticipate my business being phone-heavy, though I intend to be available to my customers.

    I would say definitely make the switch and take back control of your money. If you have the cell phone for business, the nice thing is you can write it off if you have to stay on a plan. (Depending, of course, on how much volume is business-related. I don’t advocate cheating.)

    Edited to add: I, too, have dropped my landline and now have only a cell phone. It makes it much easier for people to reach me. Big savings!

    Jen M.

  119. Brandon says 08 May 2009 at 06:44

    I recommend T-Mobile Flex Pay. I switched from Verizon Wireless to T-Mobile close to two months ago. As a result, I save approximately $50 a month. I have all the benefits of a post-paid account (600 anytime mins., unlimited n + w, unlimited data, 400 text messages, insurance) w/o a contractual obligation.

  120. Cherryl Hanson-Simpson says 13 May 2009 at 09:21

    I have been using prepaid phone for couple of years now and have saved a bundle. It is cheaper and it allows you to better monitor your calls as well. I will encourage you to try it out because you will not regret it.

  121. Allen says 17 May 2009 at 00:21

    I have been using Net10 for several years now, and have had only one problem that made me consider moving away from them. The problem was I was trying to have a cell number rolled back to an older phone, and they just kept messing around and around. That’s the only real problem I’ve had.
    I usually but 150 minutes a month, and when my minutes get too low, I add a large amount of minutes (600 or 1000) to build a balance from.

  122. Derick says 18 May 2009 at 09:48

    I also have a net10 prepaid phone, I moved across from contract about a year ago and I haven’t looked back. I was able to keep my number without any problems and I’m saving around $35 per month in comparison to what I was spending on contract. I only pay 10 cents per minute for local and long distance calls. I don’t have to pay for roaming and there is no daily fee or extra state taxes so it really is the cheapest prepaid around.

  123. Jenny from Cricket Wireless says 20 May 2009 at 08:10

    Prepaid is fantastic. If you only need phone service you can get a prepaid plan for $1/day, so even if you used your phone every day 24/7 it would still be no more than $31 for a month with 31 days 🙂

    If you use your phone too much to feel that prepaid is a good option, or you want text and mobile web, with Cricket Wireless you can pay a flat monthly fee for unlimited service. For text and talking only it’s $35, but add in unlimited web browsing and it’s $60/month. With no overages, ever (because it’s unlimited). Much nicer than worrying about surprise bill at the end of the month.

    Cutting cell phone bills should be at the top of everyone’s mind, because it is one of the easiest ways to reduce overall expenses.

  124. Shaun says 25 May 2009 at 12:22

    A great way to save money on cell phone charges is to switch to prepaid cell phone service. You pay only for the minutes you use and that’s it! You can text, make long distance calls, etc. without spending more than necessary. I would recommend switching to prepaid to anyone who is tight on money and need a break.

  125. cheap chick says 30 May 2009 at 19:34

    I dumped my AT&T phone and got out of my cellphone contract when the company changed its terms. (Did you know that if they do that, it voids the contract? They don’t tell you that, but I saw it on the Consumerist site and it worked! No termination fee too. Haha.)

    Anyway, I got a prepaid Net10 phone and everything is 10 cents a minute… even International calls which is great since my son is traveling right now.

    But the best thing about this is that there aren’t any bills and I know what my costs are because I pay upfront for my calls. It’s great!

  126. Chris Chan says 25 July 2009 at 19:02

    I have a Tracfone and have been using it alot this summer. It’s a great way to keep in touch with your kids. Calls and texts are less expensive on a TracFone than on other phones and with no contract, there’s no surprises!

  127. Shawn Levasseur says 11 September 2009 at 14:24

    If anyone is still reading these comments this far down, here’s another benefit of pre-paid plans.

    The phones are cheap.

    When I had a regular cell phone, with contract, I had my phone break. The cell phone company was of no help. To get the phone repaired would cost $100, and they’d give me a loner (but they had no loners available), I could replace the phone with a “cheap” refurbished phone for $100, which they didn’t have in stock. So, i’d have to wait a few weeks in either case.

    I offered to re-up my contract for another two years for a brand new phone. Nope. I was one year into a two year contract and it would be another 4 months before they’d allow me to do that.

    Now maybe I should’ve paid for the ‘insurance’ for such an event, but having done the math, I would’ve ended up paying even more than the $100 and still have ended up with a refurbished phone.

    I did the math and determined, that given how much I used the phone. I could switch to Tracfone, and it would be cheaper, even with the early termination fee for breaking my contract early.

    Tracfones are low cost, over the counter puchases, You may not have all the bells & whistles but if all you want for features is to just make phone calls, they work as well as the expensive phones do.

    I’ve since lost a tracfone (twice) and although one loses the minutes that are on the lost phone, replacing the phone itself is not a major expense.

    The carriers abuse their customer base by deliberately keeping cheaper phones off their shelves, thereby making it easier to get users into contracts so that the expensive phones can be then ‘subsidized’.

  128. FreedIncome says 17 September 2009 at 16:48

    I recently switched from a monthly cell phone bill of $95 to prepaid and I found that on average a $70 prepayment will last me 2.5 months. That’s a savings of 70%. It was one of the best decisions I’ve made.

  129. Pat Yoe says 19 December 2009 at 12:50

    I have Straight Talk, which is just an amazing deal.

    I was skeptical at first but everything good I’d heard about it is true.

    No more crappy coverage from AT+T. The Verizon network is solid and I haven’t dropped a call yet.

    I think $45 a month is fantastic and I got a very nice Samsung phone with a qwerty keyboard so texting and web surfing is easy too.

    I’m saving hundreds of dollars a year now so it’s pretty awesome.

    I’m not the only one who thinks so, either.

    Here’s another happy Straight Talk-er:
    http://www.youtube.com/watch?v=oI40Fqglgys

  130. Don says 18 January 2010 at 11:04

    a virgin phone for mobile emergencies and a majickjack for $20 a year unlimited usa and canada is my complete answer to all my needs 🙂

  131. D. Gates says 24 January 2010 at 08:20

    I’m surprised that only one comment has mentioned Boost. I’m looking to switch from a $80/year Tracfone setup because I’m paying mainly for service time, not minutes.

    Boost’s flexibility should let me drop to under $20/year with my current usage, and the lower per-minute cost means I could talk five times as much and still have a lower yearly bill.

  132. David says 28 January 2010 at 10:58

    We like Kajeet. $30 unlimited talk and text… can’t beat that price. There’s a little trick to getting that plan. You have to call and request the family plan. Also, Kajeet works for us because of the parental features. We can control our kid’s phones from home or any computer. We used a promo code to get the phone and it save for us as well. “BARGAIN” was the code.

  133. Pat Yoe says 30 January 2010 at 09:55

    I have Straight Talk on the Verizon network. Bought it at Walmart and it’s an amazing deal. The Samsung Finesse is a very cool smartphone and paying only $45 a month for unlimited everything is the best deal going!

  134. Kimberly says 30 January 2010 at 21:13

    I have Straight Talk as well and I am very satified with it. A friend of mine recommended that I give Walmart a try when I was looking for a new cell phone company and I had no idea that Walmart was carrying their own prepaid service – what a bargain! I’m paying $45 a month for unlimited service on the Verizon network and I have the best of all cell worlds – great service at a great price. The selection of phones is great as well and very well priced. Straight Talk is a great deal without the pages of bills and contracts I hated.

  135. Jonathan says 10 April 2010 at 08:27

    I use MetroPCS (a post-payment) for my service. Their services are limited to a select few metropolitan areas but significantly cheaper than the telecom giants like verizon and at&t. I get unlimited minutes and data for $45/mo, but if I ever have to go out of town I keep a pre-pay AT&T phone with me just in case I don’t get service on the Metro. I think the situation works well for me, and is worth checking into if you moderately travel. It beats paying roaming at $.40c per minute and possible lack of phone service. Metro’s coverage is growing quite a bit now, so I think I can phase out the prepay.

  136. JohnnyH says 19 April 2010 at 13:46

    For Mother’s Day I am getting my Mom a net10 phone. She doesn’t use her phone too much and has been just totally taken advantage of with huge bills and she will never ever use the amount of minutes allotted to her. Getting her a prepaid Net10 is the best thing for her.. shes going to save soooo much money!!. It’s simple for her because theres nothing hidden to trick her with random fees and no contracts.

  137. Beth says 28 June 2010 at 09:13

    I got my frugal husband a Net10 phone for father’s day. It’s perfect for him since he’s not much of a talker and didn’t want to spend a lot of money on carrying around a cell phone. I finally convinced him that it’s totally affordable at $15 a month and it’s sooo much more convenient to have one. Now, he swears by it 🙂

  138. cynthie says 14 July 2010 at 10:48

    You know Beth I completely agree with what you are saying. I am really thinking about getting a Net10 phone because my mom really needs something just like that. To save money and spend 15 bucks a month.. is just perfect. I heard the service is great too. Is that true???
    I mean ten cents a minute is UNREAL for someone who isnt on a crazy contract and forced to spend so much more money.

  139. JKC says 07 November 2010 at 08:08

    Links to Greg Karp articles appear broken.

  140. Marc Huygin says 16 January 2011 at 17:37

    Net10 is a great company if you want to switch over to prepaid. I’ve had it for a year and the service is great and affordable.

  141. lisa says 07 March 2011 at 13:50

    I have been with contracts all my life. And recently discovered how much money i could be saving by becoming a prepaid customer! So i did and its remarkable how much money i save every month with NET10, their coverage is great from coast to coast, but their customer service aint all that great, but every company has its flaws!

  142. Antonia says 19 October 2011 at 08:50

    I have been using a prepaid phone for years. Currently I have one from U.S. Celluar. I pay only $40 a month for 450 min unlimited text, video, and pic messaging and a small amount of web data. If I wanted unlimited talk and text, video, and pic all I would have to do is pay an extra $10 a month. They also have some smartphone plans.
    This is way cheaper than my friends who have contact plans with U.S. Cellular.

  143. jacob says 13 March 2012 at 09:43

    I had prepaid T-Mobile and recently switched to Verizon because my friend sold me his razr DROID phone for really cheap. Supposedly it was a 600$ phone for $100 so i went for it. And what a mistake. I didn’t need to sign a contract “thank god ” because I brought my own fone in.
    Now I paid 100 dollars a month for unlimited talk and text in additional 80 dollars a month for data taxes insurance. So i am over paying 130$ a month. When I asked if they had a prepaid plan they said yes its called verizon unleashed. This service cost 50 dollars a month for unlimited text talk and data the only difference is it’s prepaid. So when I tried signing up for this they said I can’t because my phone is 4g and you get punished for buying a 4g phone apparently if it were only 3g it would all be $130 a month cheaper? ?? The sad thing is only 3g works in my area anyways… the moral of the story is. Never get Verizon and if you do. Only get prepaid. Actually T-Mobile doesn’t have $50 a month unless it’s prepaid so looks like prepaid is cheaper now with every company. So looks like contracts are only for people who want free phones but if you think about it. I’m paying 180$ a month now and instead of unlimited data I now get 10gigs. Prepaid was advertising unlimited.

  144. Ross Williams says 13 March 2012 at 10:19

    I have only used pre-paids. I started with Virgin Mobile and would not recommend it to anyone. Their customer service is lousy. I was satisfied at first but then bought a new phone. It didn’t have the features advertised which is why I bought it. I changed back to my other phone, returned the new phone and they shut off my number and refused to restore it. The number that was on all my business cards now got a message that the phone was no longer in service.

    I switched to AT&T Go phone. I don’t make that much use of my cell phone, so I use the $1 per day on the days I use it. We still have a land line which is required for our internet service. As others have pointed out, that is a lousy plan if you use the phone every day as your primary line. They also charge for each text message.

    I think the whole smart phone thing may be a game changer in terms of prepaid. Does anyone know if any companies have pre-paid plans for an Android?

  145. Ross Williams says 13 March 2012 at 10:23

    BTW, to be fair to Virgin Mobile, the reason they wouldn’t give me my number back once they had mistakenly shut it off is that they couldn’t. They get their service through Sprint and once they return the number, they can’t get it back again.

    But that is the problem. Virgin Mobile markets cell service, mostly directed at teens. It doesn’t actually provide the service. If you are going to go with pre-paid choose a company that actually provides the service you are buying.

  146. amack says 11 May 2012 at 21:36

    It just seems surreal to me that if I go into the store and get a phone there with a contract I will be paying so much more money. Whay aren’t more people going the prepaid route? Is it becasue the choice of phones is limited? At&t, Tmobile, and verizon all have this deal for only $50 a month you get unlimited talk, text, and data. It is unreal.

  147. Christina Hudler says 30 July 2013 at 19:05

    I know this is an older article, but prepaid phones are now better than ever even for the frequent user! I pay $45 per month for unlimited talk text and data 🙂 I paid over $100 per month on my prior plan for only 500 minutes, 1000 text, and unlimited data.

Leave a reply

Your email address will not be published. Required fields are marked*