There are two major types of mobile phone service – contract plans or pay as you go. Each of them has pros and cons, and knowing them can help you choose the best kind of mobile service for you.
Pre-Pay (Pay as You Go)
What is it?
With a prepaid mobile service, you buy your own handset and pay ahead for a specified number of minutes. You can add minutes to your phone in various increments whenever you need more minutes by topping up with credits you can buy online, at shops or by credit card.
Pros of Pre-Pay Service
- Pre-pay gives you more control over how much you spend.
Because you can only use the minutes that you’ve paid for, there’s never a danger of running up your mobile account without realizing you’re doing it. Your phone simply stops working after you’ve used up all your minutes until you top up with more minutes
- Pre-Pay mobile service doesn’t obligate you to a contract.
When you choose a pre-paid mobile service, you don’t commit to a long contract, so you don’t have to worry about being trapped into a long term with a service you don’t like. That also means there’s no danger of being stuck paying a high penalty if you end your contract early.
- Pre-paid phones are a low-cost solution if you don’t use your mobile much.
If your main purpose for having a mobile is for emergency use – to have on the road with you, for instance, so that family and friends can reach you, or so that you can always call for roadside service, then a pre-paid service may be your best, most economical option. Generally, if you use less than ten minutes a day of cell phone service, then you’ll save money with most pre-paid mobile services.
Cons of Pre-Pay Service
- Calls may cost more than with a line rental contract.
In general, you’ll pay more per minute with a pre-pay service than you will with a line rental contract. If you’re going to use more than about 300 minutes per month, you’ll probably be better off with a contract service.
- You’ll have to pay full price for a handset.
With a pre-pay mobile service, you’ll be required to provide your own handset. Typically, you won’t find many deals that will substantially cut the cost of your mobile. On the other hand, you can often buy a mobile that will work with most pay-as-you-go carriers at auction or online for far less than you’ll pay in the shops. Of course, the choice of handsets that will work with pay-as-you-go is far more limited.
- You may pay more for other services like downloading.
Like phone call minutes, other services may cost more with pay-as-you-go, since there is no line rental fee to subsidise the charges. If you intend to do much in the way of downloading or streaming or web surfing from your mobile, you should consider a contract plan.
Pay Monthly Contract Plans
What is it?
With a line rental contract, you pay a set monthly rate on a contract that may have a term as long as three years. You’ll have a preset number of free minutes that you can use for various services, and pay a premium for any overages.
Pros of Line Rental Mobile Service
- The cost of calls is generally cheaper than with pre-pay.
If you use more than about ten minutes a day of minutes, you’ll probably save money with a line rental contract. This is also true of nearly all other services, including downloading and data transfer.
- You’ll often get a free or discounted handset with your contract plan.
And they’re often the most wanted models. When you sign with a contract plan, you’ll usually get your handset for half price or less – as long as you accept the mobile offered with the plan you join.
- You won’t ever “run out of minutes”.
Your service won’t stop working when you use up the minutes you pay for on your plan. Instead, you’ll be billed for the overage at the end of the month.
- There’s a wide variety of plans available to suit your needs.
If you shop around, you can nearly always find a plan that suits both your needs and your pocketbook.
Cons of Line Rental Mobile Service
- You are committed to a term of service.
You sign a contract agreeing to continue with the service for 12, 18, 24 months or longer, so you have far less flexibility than with a pay-as-you-go service.
- You may pay a penalty if you choose to switch carriers.
If you choose to end your contract early, you are still obligated to pay off the contract, or at least to pay a penalty for ending the contract before its term has run its course.
- You could end up paying high bills if you’re not careful of your usage.
Because your overages are automatically included, you could end up paying unexpectedly high bills at the end of the month. It’s important to stay on top of your mobile usage when you’re on a plan.
