When purchasing a cell phone, you have two basic options that are to be considered, prepaid and contract plan phones. Depending on what you plan on using it for, how much you use your phone, and how much you are willing to spend will determine which one is best for you. Both sides have their advantages and disadvantages and I have had each type in my lifetime more than once. Over my time using these two types of devices and working at a local AT&T store I have begun to recognize the good and bad that comes along with each. Here are the pros and cons of buying a prepaid versus a contract phone that you should consider before taking the plunge.
Rates-With most cellular carriers, when you sign your contract your rate is locked in for the duration of your policy. This means that if for some reason the prices they charge for minutes or data is raised you will not be affected. This is great for someone who is on a strict budget as they know exactly what portion of their earnings will be spent toward their cellular bill.
Service– When you sign a contract with a cellular company they are acknowledging that they have certain obligations to fill over the time of the agreement. This can include but is not limited to product warranties, annual upgrades, roadside assistance and more. These features, while not necessary, offer peace of mind when it comes to knowing you will get the amount of service you require.
Selection– The variety of devices and phones that you have to choose from is large and wide. Often these phones come at a discount price, and sometimes free, when signing up for a new cellphone plan. This allows you to be able to afford a phone that would normally be way to expensive to buy flat out.
Tied Down– One of the major disadvantages of a contract cellphone plan is that you are directly linked to the service you have chosen. This means that you cannot switch to another provider regardless of their better prices, services, or promotions until your contract has ended or you terminate your service, usually at a steep fee.
Little Flexibility– When purchasing a cellphone plan you must calculate your expected usage carefully. You may choose a plan that is too large and waste money on unspent minutes and data or choose one too small and risk paying more than you would like for using your phone too much. Many carriers offer unlimited usage plans but these are often expensive and have many stipulations that come with them.
Chance of Termination– With a contract phone, the provider has the option of terminating your service for a missed payment while your bill still mounts up. This could leave you in an extremely unfortunate situation for a myriad of reasons especially if your cell phone is the only phone you have in your household.
Freedom– One of the greatest things about prepaid cellphones is the freedom of no contract. You can change your service at any time or choose to just stop it all together.
Price– Another advantage to these phones is the often low end cost. When you factor the cost of a new phone, add a plan, and tack on service fees a cellphone can become a very expensive venture. Often the phones are inexpensive, the plans are affordable, and even unlimited options are much cheaper than their contracted counterparts.
Make Your Own Rules– The amount you pay per month is completely decided by you and how much you use your cell phone. Even better, when you fail to use the credit on your phone it will carry over to the next month and in most cases does not expire. This make prepaid phones very flexible and easy to use without having to micromanage your actions.
Limited Selection– When choosing a prepaid service you will have nowhere near the full range of cell phones and plan options that are available to you with a contract. No-contract services tend to offer out of date technology and devices that will leave you far behind the current tech device curve.
Spotty Service– One of the biggest disadvantages to prepaid cell phones was the often inferior and second rate signal quality. Since most of these providers are “piggybacking” on other companies towers you will be receiving a much lower quality cell service than their contract products. I have not had one prepaid phone yet that was reliable in every location I visited, even within my own state.
Less Service Stores– With contracted phones it’s very likely that no matter where you live there is a physical store you can visit if you have a problem. If you need help with a prepaid phone most of the time you will need to go through online or over the phone methods for solving the issue. This takes time that you normally would not be spending on other contracted plans.
As I mentioned above, it all depends on what you want the phone for and how much you will use it. For me, I decided that the cheaper prices and plan flexibility made prepaid phones a much smarter choice, however, if you like the idea of a set price and newer technology, a contract is probably the way to go.
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