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Types of Prepaid Phone Plans

While prepaid phone plans provide more flexibility, they are sometimes a little bit more confusing. Every carrier is a little different, and prepaid phones have come a long way since their introduction in the early 2000s. If you’re looking to get rid of your contract and go the cheaper and smarter prepaid route, here are some of the different kinds of plans you’ll need to be aware of:

Monthly Prepaid Plans

This prepaid plan is the most common and is probably the most familiar if you’ve had a contract device. Like most regular contract plans, your service will renew every 30 days. Most monthly prepaid plans come with unlimited talk and text with a limited amount of data, however a few companies do offer monthly prepaid plans that have limited voice or texts for people who don’t use their phones as as much.

The main differences between a contract plan and a monthly prepaid plan are:

  1. Pay at the beginning of the month
  2. You will have no contract, meaning you can change plans or cancel at the end of the month if you want
  3. Overages are generally not allowed (or, if they are allowed, you must have a positive balance on the account).

Monthly prepaid plans come with different features and restrictions, so be sure to check with your carrier.

Pay-as-you-go Plans

These plans are the kind that most people think of when they think about prepaid phones. With pay-as-you-go plans, customers purchase cards with a limited amount of funds on it and ‘load’ those funds onto their account. Whenever you make or take calls, send text messages or browse the internet, you will be charged at a set rate per minute, text or MB. Once your account reaches $0 you will have to purchase additional funds to continue using the service.

The main differences between a contract plan and a pay-as-you-go plan are:

  1. Nothing is unlimited; you pay for every text, minute or MB that you use individually
  2. You will pay at the beginning of the month instead of the end
  3. You will have no contract, meaning you can cancel at any time
  4. There are no overages, as service is terminated when you are out of money

Be sure to read the fine print of these kinds of plans to be sure that you’re getting a good deal. Also, many times companies will offer better rate per minute/text/MB with higher-value cards. However, be aware that if you cancel service, these funds are non-refundable.

Feature Phone Plans

Sometimes you don’t really want a super fancy smartphone with all the gadgets, widgets and data. If that’s the case, then you will want to purchase a prepaid feature phone plan. Most prepaid carriers offer these plans specifically for flip phones or basic phones. These phones will generally not have a touch screen and will not be suited to or capable of connecting to the internet, downloading apps and other data-centric activities.

The main differences between a contract plan and a feature phone plan are:

  1. You can select a plan with little to no data (usually at a lower cost)
  2. You will have no contract, meaning you can cancel at any time
  3. You will pay at the beginning of the month for your service

Feature phone plans are, obviously, only meant for feature phones. This means that you will likely not be able to get on the internet, or it will be extremely expensive to do so. Only select these kinds of plans if you intend to only use your phone for calling and texting.

Postpaid No-Contract Plans

These plans are probably the most misunderstood, as they are somewhere between contract plans and prepaid plans. Postpaid no-contract plans are not prepaid, as you will be billed for your usage at the end of the month instead of the beginning. However, these plans tend to have similar benefits to prepaid, such as no contract and lower prices. Many times, companies and even people will lump postpaid no-contract plans in with prepaid, as they do share many similarities. A good example of this model is Ting, which advertises very similar to a prepaid, but really is not prepaid.

The main differences between a contract plan and a no-contract postpaid plan are:

  1. You will have no contract, meaning you can cancel at any time
  2. Many times (but not always) you will be charged per minute/text/MB, much like a pay-as-you-go plan. The difference is that you will be charged at the end of the month instead of prepaying at the beginning of the month.

These plans are very tricky so be sure you understand what you’re getting into and keep a close eye on your usage to avoid a bill shock at the end of the month.