How to Compare Pay-As-You-Go Cellphone Plans

by Scott Krohn

Pay-as-you-go cellphone plans, also referred to as prepaid plans, offer the advantages of having all the utility of programs that require a two-year contract, lower monthly bills than deals requiring a contract and the option of discontinuing service at any time. Here are are several comparisons that can help to define a cost-effective plan that delivers all the functionality you require.

Why Choose a Prepaid Plan?

Prepaid cellphone plans offer consumers an attractive package that doesn’t require a long-term commitment to a carrier, phones with the same level of functionality as those in contract-based plans, and the ability to activate and use a cellphone without being forced to pay a deposit as a result of having a low credit score. Another significant advantage of pay-as-you-go plans is their affordability versus the average cost per month of $93 for typical two-year contract plans. With the roll-out of pay-as-you-go plans by major carriers, consumers have a variety of options, mandating some comparison shopping to define the best plans for specific uses and circumstances.

Start with “Apples to Apples” Comparisons

Pay-as-you-go cellphone plans offer options that include emergency use only, usage limits on talk and text, and unlimited talk/text plans with varying data allowances. For the most cost-effective purchase, keep in mind that unused talk/text limits, data allowances and other features will usually result in an unnecessarily expensive plan. Once the level of service required from the plans under consideration has been determined, make sure that comparisons are being made between programs with similar usage features for talk/text as well as the data allowances as measured in megabytes or gigabytes if the phone will also be used to access the Internet. After comparing these metrics, check each plan under consideration for extra features, such as international calling minutes, to further granulate the benefits of each program.

Comparing Coverage

Perhaps the most important comparison between prepaid plans is the quality of coverage for the places where your phone will be used most frequently, as even the most feature-loaded smartphone will be basically useless in areas without phone and Internet connectivity. For most people, the areas to be assessed for the level of coverage should include home, school, work and anyplace else where the cellphone will be used on a regular basis. The most accurate information for this comparison will be found by asking actual users about signal quality in each area, while the least specific data often comes from the coverage maps of the major carriers, which tend to exaggerate their reach for competitive purposes.

Comparing Available Devices

The major carriers typically offer plans with a wide range of device options including iPhones and Samsung’s Galaxy models, but smaller carriers may have severe limitations on the types of phones that will work within their programs. If you have or need a specific device, make sure the carrier can support it. If an existing phone is going to be activated in a new plan, it is essential the device is compatible with the carrier’s radio system. For example, Sprint and Verizon require devices that are compatible with CDMA, while AT&T and T-Mobile operate on the GSM system. If buying a new phone isn’t an option, compatibility with carriers’ radio systems will be a primary factor in the final decision for a pay-as-you-go cellphone plan.

About the Author

After working for 21 years as a licensed adviser specializing in corporate and private finance, Scott Krohn began his writing career in 2008 covering a variety of topics including business, personal finance, health, and IT. He graduated from Cal State University, Long Beach with Bachelor of Arts degree.

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