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February 08, 2019

What Kind of Cell Phone Plan Is Best for You?

woman using smartphone

Picking the perfect cell phone plan can be daunting. From deciding on the right amount of data and minutes, to choosing between a pay-as-you-go plan or a contract, the variables to consider seem infinite. It seems like carriers are constantly changing up their offers, which only adds to the confusion. Of course, the kind of cell phone plan you get should depend on your family structure, your lifestyle, and your budget. Below, we break down the specifics of pay-as-you-go and contract plans to point you in the right direction.

Pay-as-you-go cell phone plans

Also known as a “prepaid cell phone plan”, these plans let you pay in advance for the specific amount of talk, text, and data minutes you think you’ll use.

Upsides: There is no contract and no credit check. Oftentimes, the monthly costs are much lower than plans offered as part of a contract. If you’re on a fixed budget or you have less-than-perfect credit, this may be a good option to explore. Some plans are as cheap as $15 per month; other plans allow you to add international calling to Mexico and Canada for a small fee — if you have family there, this alone could be a game changer. Because there’s no contract commitment, you also can adjust your calling needs on a month-to-month basis. This works best for people in transition periods, such as students studying abroad, or people traveling temporarily.

Downsides: If you use too much talk, text, or data (or don’t use enough), you could end up paying more in the end. For instance, if you go over what you’ve prepaid, you may not have any service for the rest of the month, or be charged more per minute than you originally budgeted for. Be sure to ask about how the plan charges for overages. If your usage has an expiration date — some expire in 30 or 60 days — you may pay for minutes or data that you don’t use. Lastly, your choice of phones may be limited. In other words, you might not be able to get the latest iPhone or Samsung Galaxy, and you’ll probably have to pay more for the phone up front than if you signed a contract.

Cell phone contracts

With these “postpaid” plans, you choose the call, text, and data allotment that seems to best fit your needs and pay a monthly fee.

Upsides: If you want the latest smartphone that comes with all the bells and whistles (but you can’t afford to pay for it outright), consider signing a contract. You can get a great phone without paying much (or sometimes anything) up front. After you’ve finished paying for the contract, you can get a new phone. Some plans allow you to upgrade to a new phone in as little as six months.

Often, cell phone contracts offer the best deals to families with multiple phone users, or to customers that know they will use a lot of data. Many carriers offer unlimited data plans when you sign a contract. If you use lots of data and don’t want to keep track of your usage, this could be a great option. You might find more perks with a postpaid plan, too: for instance, some carriers offer unlimited texting to foreign countries, and others provide unlimited international calling for a few extra dollars per month. Lastly, you don’t have to renew on a monthly basis, limiting the chance of experiencing a gap in cell service.

Downsides: Cell phone contracts require decent credit. If your credit score is poor, you probably won’t qualify. If you chose a plan that allows for a set amount of data and then go over it, you may pay some hefty fees, or experience severely slowed data speeds. Because you signed a contract, cancelling your postpaid plan is very difficult. Be sure you’re ready to commit.

When it comes to picking a cell phone plan, consider your needs and your income. If you’re on a budget and don’t have great credit, a prepaid cell phone plan might be best for you. If you want the newest phone and you use lots of data, consider a postpaid plan.