Prepaid vs. Postpaid Phone Plans: What's the Best for You?

Not sure what the differences between prepaid and postpaid mobile plans are, or which one you should choose? Here's what you should know.

When buying a new phone plan, most people choose between a prepaid or postpaid plan (also known as a contract plan). But if you've never taken out a cellular plan for yourself or haven't shopped around much, you might not know the exact differences and benefits of each type.

Here's what to know about prepaid versus postpaid mobile plans and how to figure out which one you should choose...

Prepaid vs. Postpaid: What's the Difference?

The biggest difference between prepaid and postpaid plans is hinted at in the name: i.e. when you pay for the plan's services.

With prepaid mobile plans, you buy the services—such as data, SMSes, and more—before using them. Meanwhile, with postpaid, you have a contract or account with your mobile provider that includes an allocation of services that you are billed for monthly.

It's a similar difference to prepaid electricity versus electricity accounts that are billed after usage.

Let's take a look at each type of plan and how they work...

What Is a Prepaid Phone Plan?

With a prepaid phone plan, you buy your airtime, data, minutes, and bundles before you are able to use them. These plans are also known as pay-as-you-go plans, since you purchase more bundles once you've used up your allocation.

Prepaid plans do not require a contract with a mobile provider. Rather, you are able to load services onto your SIM card whenever you need to top up. When you run out of airtime or an allocated service such as data, you simply cannot connect to that service anymore until you purchase more.

As such, there's also no need to really cancel a prepaid phone plan. Some mobile providers will deactivate a SIM card or phone number if no airtime or services are loaded for a specific period of time.

Prepaid plans are the easiest way to access a mobile provider's services, as well as the most affordable and flexible.

Some people view them as more private too. However, this depends on regional laws. In some countries, you still have to provide identification and proof of address when activating a prepaid SIM card due to local regulations.

What Is a Postpaid (Contract) Phone Plan?

A postpaid or contract phone plan is more formal. Since you are billed monthly for the services you use from the network, you need to have an account with the mobile provider.

This may also require you to have a credit record and good credit in order to take out a contract.

Similarly to prepaid plans, you select specific bundles of data and voice minutes depending on your needs. Some postpaid plans also allow you to top up your monthly quotas for discounted rates.

However, if you keep using the services past your monthly allocation, this will be charged to your account.

While prepaid plans require you to purchase devices for cash, postpaid plans allow you to choose between SIM-only, device-only, and combined SIM and device contracts.

This means you can not only purchase mobile services from your provider, but can also include the price of a smartphone in your contract that is spread out over the term of your plan.

But because of the formality of postpaid plans, they are harder to cancel and may attract cancellation fees.

What Are the Benefits of Prepaid?

The benefits of prepaid plans versus postpaid plans lie in the flexibility and control overspending.

There are a lot fewer hoops to jump through to purchase a prepaid SIM card. In terms of affordability, while you may pay the same rates as a postpaid customer for bundles, spending is easier to control.

If you face budget constraints one month, you don't have to risk missing a payment on your mobile plan.

You are also free to switch your mobile provider with little hassle and without much to lose since you just need to buy a new SIM card and bundles.

You also don't need to worry about having a good credit record in order to buy a prepaid SIM card.

What Are the Benefits of Postpaid?

One of the major appeals of postpaid plans is the ability to buy devices on credit. In regions where mobile providers are the primary retailers of mobile devices, mobile contracts are one major way people purchase premium smartphones on credit.

Some mobile providers also provide discounted bundles and specials through their contracts, allowing customers to save money if they buy a contract at the right time.

Then there's the benefit of having a central account. While the allure for postpaid plans for individuals may not be there if you can buy a device for cash or have other credit alternatives, many families opt for postpaid accounts so that they can link multiple SIM cards and plans to a single billing account.

Related: Useful Tips to Reduce Mobile Data Usage and Save Money

Prepaid vs Postpaid: Which Should I Choose?

The best plan for you will depend on your needs.

If you worry about the ability to make regular payments on a contract, a prepaid plan can offer a less stressful alternative.

Similarly, if you can easily buy your devices for cash or don't want to get them from a mobile provider, a prepaid plan offers great flexibility without locking you into a long-term contract.

However, a postpaid plan is useful if you want a centralized account for your smartphone and mobile plan repayments. They're also great for families who use multiple services from a provider.

We always recommend reading those terms and conditions though, to make sure you're not being locked into an unreasonable contract.

If you're stuck in the middle and still trying to decide, dual SIM phones can also give you the benefits of both postpaid and prepaid plans. Many people use services from multiple providers depending on which one offers the best prices, buying a contract on one plan and topping up airtime or data on another.

The downside is that some carriers lock their devices so that you cannot use them with another network provider's SIM cards.

Read more: Reasons You Should Get An Unlocked Phone

Weigh Up What's Best When it Comes to Prepaid vs Postpaid

Ultimately, it comes down to what suits your situation and needs the most.

Make sure to weigh up the benefits of each type of mobile plan and choose whichever one is right for you.

About The Author