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Summary:

These days, everyone’s looking for another way to cut costs. One relatively painless way is to make the switch to a prepaid cell phone plan. According to 2008 data from the Cellular Telephone Industry Association, of the 262 million cell phone subscribers in the U.S., only 16.9 percent of them are on prepaid plans. Here are five reasons that a prepaid plan might be right for you.

[qi:112] In these worrisome economic times, cutting costs is top of mind for many. But choosing a prepaid cell phone plan can be an easy and relatively painless way to save money. According to 2008 data from the Cellular Telephone Industry Association, of the 262 million cell phone subscribers in the U.S., only 16.9 percent of them are on prepaid plans. That’s far less than in other countries, including most developed nations, where the range runs from 37 percent all the way to 89 percent of the cell phone market, according to the CTIA. I doubt we’ll ever get to that 90-percent penetration mark, but below is a list of five reasons that a prepaid plan might be right for you.

  1. If a plain-old phone will work for you, and you’re willing to buy it up front: Most cell phones sold with contracts are subsidized by the carrier, which can help when purchasing a BlackBerry or an iPhone. But if you can tolerate a lower-end phone, a prepaid plan might work for you. For example, a refurbished Samsung A117 phone costs $19.99 from AT&T, while several basic refurbished Nokia models are sold for $9.99.
  2. If you keep your phone beyond the 2-year contract period: Prepaid services require a phone purchase up front, but for those who don’t switch phones or like using their old ones (surprisingly there are some GigaOM staffers who fit into this category), eliminating the contract also eliminates the prepaid phone subsidy carriers build into their monthly plan fees.
  3. If you talk less than 200 minutes a month: Plans from T-Mobile, Leap Wireless and MetroPCS are generally more economical than the cheapest post-paid plans from national vendors.
  4. If you have a bunch of friends and family members who are on different carriers: If you’re the only one with Verizon service in a family of Cingular users, you’re not able to take advantage of the ability to talk to friends and family who are in-network for free. And while you could switch carriers, you might find that a prepaid plan better meets your needs. Some providers, including AT&T, have prepaid plans that allow for unlimited in-network calling.
  5. If you rarely roam: This might not work for many of our readers, but it might for their kids. For those on family plans, choosing a prepaid option for a teen who doesn’t travel might make sense. Some prepaid plans offer “local” unlimited calling for as little as $30-$35 a month, including text messaging and picture messaging.

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  1. One more reason to go with prepaid phone plans: Kids. Do not give postpaid phones to kids. Before you know it the costs are out of control.

    Oh – and here’s another one: If you lose a prepaid phone, the maximum damage is the value of your phone + the remaining value of the card. If you lose a postpaid phone, the maximum damage could bu much, much higher.

  2. We recently got Tracfones for our kids who needed the phones a few times a week for security and convenience – after school pick activity coordination, etc. We have been very pleased with the service. The minimum buy-in is $20/3 months which includes about 180 minutes. That’s less than $7/month/phone with NO additional taxes and fees that you get from the regular phone companies. PS – the phones themselves were only $10.each.

  3. “Some prepaid plans offer “local” unlimited calling for as little as $30-$35 a month”

    WHERE?!!

  4. does anyone know if you can port from postpaid to prepaid?

  5. @benn nguyen

    You need to be lucky enough to be in a market served by Cricket. That precludes quite a lot of the US.

  6. 4 virgin mobile phones in house for 3+ years. loving life w/o contracts and cheap phones…

  7. Stacey Higginbotham Thursday, December 4, 2008

    @benn. Jesse is right. Cricket and if you’re in Texas you can get service from Pocket Wireless. There may be one or two other regional providers like this.

  8. Aren’t we forgetting some pretty simple things though here regarding pre-paid anything…they DON”T have the same features as a full service phones…and without features we aren’t cool…according to my daughter.

    To keep up with the jones’s…how do we address this issue…

    in all seriousness, prepaid does not carry or even remotely come close to have the same technology running behind their infrastructure. By technology, i mean email, web, gaming etc…

    –Best,

  9. Stacey Higginbotham Thursday, December 4, 2008

    Chris, it apparently went without saying (my bad) that these aren’t for emailing and those searching for a web experience. But you’re right, they are for voice, pictures and texting for the most part. But there are still plenty of people out there who think that’s fine for a phone in any case. And I bravely imagine myself telling my now-two-year-old in a few years that if she wants email then she can pay for her own data plan. I’ll let you know how that goes :)

  10. As someone who’s happily used a prepaid cell phone plan for a few years now, it’s great to see this story on GigaOM. I find it puzzling and sad to see people spending more than they need on post-paid plans when prepaid plans would be more economical.

    Those considering prepaid plans may wish to consult http://www.cellguru.net/prepaid_compare.htm to see a compilation of prepaid offerings from different providers (I have no affiliation with that site.)

    At least with T-Mobile, I know one can use closer to 300 minutes per month, rather than 200 and still come out ahead with a prepaid plan.

    When buying refill cards, I’ve gotten the best deals from sellers on eBay; the price of refills can be over 10% below their “face value”.

    > does anyone know if you can port from postpaid to prepaid?

    T-Mobile allowed me to do this, about three years ago.

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