Q. I've got about three months left
in my cellular contract. I'm debating whether or not I want to renew. A friend
of mine switched to a prepaid plan and says he's saved hundreds. If that's
true, why doesn't everyone switch? Do you think it's a good idea, Kim? Thanks
in advance!
A. There is a reason more people
haven't jumped on prepaid, Percy. In the past, prepaid plans offered crummy
call quality and mediocre phones. The savings weren't worth it.
However, today's prepaid carriers
are just as good as the major carriers in call quality. That's often because
they're renting space on a major carrier's network.
Prepaid carriers even have a roster
of premium phones like the iPhone 5 and Galaxy S4. That certainly makes the
promise of a contract-free lifestyle more enticing.
But can you really save? Let's see a
side-by-side view of the cost of a typical two-year contract compared to two
years of prepaid to find out.
The best values in prepaid are the
unlimited everything plans. This means you can call, text and surf without fear
of overages. Just note, some "unlimited" plans throttle, or slow
down, your data speed after you reach a limit - usually 2.5 gigabytes.
To compare, $70 a month won't get
you an unlimited contract plan from AT&T, Sprint or Verizon. Of course,
there's no true unlimited option at AT&T and Verizon. You get unlimited
calling, texting and 2GB of data for $100 a month. At Sprint, unlimited
everything costs $109 a month.
I should point out that the major
carriers do have their own prepaid plans. AT&T and Verizon's plans are in
line with the providers above. Sprint is rolling out new prepaid plans soon, so
you might keep an eye out for those.
I've given you a lot of numbers to
add, so here's the takeaway. With prepaid, you'll pay between $1,200 and $1,680
over two years. With the major carriers, you'll pay about $2,400 to get the
same value.
I can see the dollar signs flashing
in your eyes already. But hang on, because there is a catch. It's a small one,
but it trips up a lot of people.
With prepaid, as long as the phone works, it's saving you money. Plus, you don't have to buy the most expensive phone out there.
You can make the savings even sweeter
with an unlocked Nexus 4 or other budget phone. To find out the best phones for
your prepaid plan, check out this tip.
If you already have a phone you're willing to stick with, you might even be able to use that with a prepaid plan!
If you already have a phone you're willing to stick with, you might even be able to use that with a prepaid plan!
