As technology advances and smartphones become more powerful, we’re starting to see the gap between top- and bottom-tier phones become more and more narrow. Cheap prepaid cell phones are readily available, but there are a few things to keep in mind when comparing prepaid phone plans to contract plans.


The first and most obvious benefit to choosing a prepaid cell phone over an extended contract is the freedom to stop, start and change your service at any time. The iPhone, for example, costs well over $600, but companies such as AT&T and Verizon pay all but $200 of that price in exchange for a two-year contract. In other words, you have to either promise not to switch providers for a minimum of two years or pay hundreds of dollars more to purchase an unlocked iPhone.

Because prepaid phones are generally not as expensive as the latest smartphone, no contract is required. Prepaid service providers offer daily, monthly and by-the-minute plans, giving you plenty of ways to decide how to use your phone. You’ll never have to sign a two-year commitment or pay high cancellation fees, which can sometimes exceed $300.

This no-contract service won’t break the bank, either. In fact, while some carriers may charge over $100 per month for a single line of smartphone service, most prepaid carriers offer unlimited talk, text and web for $50 per month. If you don’t need all the bells and whistles of a smartphone, your costs can be much, much lower, sometimes dipping under $10 per month.


Of course, if there were no drawbacks to prepaid phones, no one would ever sign a two-year contract. Generally speaking, you probably won’t be able to get the latest and greatest smartphone without choosing a major contract carrier such as AT&T, Verizon or Sprint. Prepaid phones, though entirely capable of getting the job done, tend to be technologically outdated.

That’s not to say that you can’t get the hottest new phone with a prepaid plan, but doing so will cost you. If you’re willing to purchase a phone at the unsubsidized price, you’ll be able to use it on prepaid networks. While $600+ may seem like a steep price, you’ll save a lot of money on bills in the long run.