Prepaid Vs. Contract: Which Phone Plan Is Better?

Smartphones are essential to our daily lives. The pocket-sized piece of technology puts the world at our fingertips, making communication, entertainment, and staying informed easier and more accessible than ever. However, once you figure out where you stand in the Android vs. iOS battle, you're left with one final decision: what phone plan will you choose?

Unfortunately, smartphones aren't very effective if you don't have a phone plan. It's not technically a requirement, but without one, you're relying entirely on consistent Wi-Fi connections, which doesn't make using the phone impossible, but it's certainly less convenient. In the United States, Verizon, AT&T, T-Mobile, Visible, Mint Mobile, and Google Fi are all vying for your business, and those options increase in international markets. You also need to decide between a contract or a prepaid phone plan, so what do you choose?

Well, the answer is probably different for everyone depending on what they need, including the number of lines, amount of data, and monthly budget. Do you want one of the best unlimited cell phone plans out there, or are you just looking for the basic essentials? Let's break down the benefits of both contracts and prepaid phone plans so that you can decide which is better for your situation.

Prepaid phone plans, sometimes called pay-as-you-go plans, are essentially that. You pay for your cellular service in advance, and if you use up your balance, your service stops until you refill it.

The lower cost is one of the biggest advantages of using a prepaid phone plan. Generally, they are a lot more affordable because you aren't getting many of the benefits you would with a contract (more on that below). In fact, some of the cheapest unlimited data phone plans for one person are prepaid. They give you much more control on how much you spend on your cellular service, as you only pay for what you need and use. So, if you're working within a budget, regardless of whether it's big or small, a prepaid phone plan lets you stay within that monthly price. Plus, there is no activation fee, which means there's more money staying in your bank account.

You can also walk away from a prepaid phone plan. Contracts tie you down for a long time, usually two years, but opting to go prepaid gives you the flexibility to change carriers or plans whenever you want. There is also no credit check associated with a prepaid plan, making them more accessible to someone who doesn't have a credit history or those with a bad credit score. So, if any of these benefits sound good or align with your situation, a prepaid phone plan is most likely your best option.

However, if you're someone who uses their smartphone a lot and values getting a new phone every few years, a contract (or postpaid plan) may be the better option.

Although they are more expensive, contracts include many more features than a prepaid phone plan. Most of them now come with unlimited talk and text, and, if it fits your budget, you can add unlimited data, ensuring you always have access to your phone's features as long as you have service. They also offer international features like roaming, calling, and texting to and from different countries, something you won't get with a prepaid plan. Plus, many of the major carriers throw in special offers like free streaming services and other subscriptions when you sign up. There's a large range of contracts, so even though you'll probably spend more money than you would on a pre-paid plan, you can likely find one that fits your budget.

Of course, the biggest draw is the phone selection. When you sign up for a new contract, you can choose from the latest selection of iPhones and Androids. Then, you're typically eligible for an upgrade at the end of your contract period, letting you pick a new phone to use for the next 24 months. Naturally, these devices aren't free, and you'll pay for them as part of your monthly bill. But if staying up-to-date with the latest smartphones is important to you, a contract is the way to go.