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One More Reason to Use Prepaid

T-Mobile was the first wireless carrier to make Equipment Installment Plans (EIP) popular, and since then all four of the main carriers have introduced the option. EIPs, as you probably know, are meant to allow customers to feel like they’re paying less for their phones by separating out the cost of the phone from the actual monthly plan. They’re pretty worthless, in my opinion, and unfortunately it looks like they’re here to stay.

A new report has been released by Wells Fargo that states that EIPs reached an all-time popularity in the fourth quarter of 2014. AT&T reported that 58% of all of its smartphone activations were through its EIP Program, while Verizon reported 25% and Sprint reported around 46%. All of T-Mobile’s Simple Choice plans are on the EIP model. However, as a result of the successes of these EIP programs, the Wells Fargo analysts noted that carriers have started tightening credit restrictions for eligible customers, and suggested this trend will continue.

“With the explosion in demand for installment plans, carriers have sharpened their focus on the credit quality of EIP subscribers,” analysts wrote, noting that Sprint in particular recently tightened credit requirements on leasing and EIP customers.

Maybe it’s because I write about prepaid plans every day, but I can’t help but look at the EIP plans and just be thankful that I don’t have to worry about any of that–AND I am saving money at the same time. So go ahead, carriers. Raise that EIP credit requirement and watch people start to fly over to the more flexible and affordable prepaid plans.