Prepaid Cell Phones Save Money–For Some.
Approximately 30% of all contract cell phone users use fewer minutes each month than they pay for. This is an interesting bit of knowledge to have in a time when people are desperately trying to trim down their bills.
According to a telecommunication think tank study, 25 million people in the U.S. would save money by switching to prepaid cell phones. Of course, this doesn’t take into account the termination fee, but it does take into account monthly minute usage. The fact of the matter is there are a lot of people overpaying for wireless service.
Something like only 15% of the nation’s cell phone users have prepaid accounts and 44 million people used prepaid phones as of this summer, so as you can see it is still a young, growing market.
One of the reasons you can save money with prepaid phones is because these companies do not have the overhead associated with a billing department, since customers pay for talk time in stores or online when they need them. The reason contract phones cost so much (at least one of the reasons) is that they spend huge amounts of money on advertising to recruit new customers. These costs of course transfer to the customer.
According to this article, about 25 million people, who use their cellular phone infrequently or for around 200 minutes or less a month, would save money by switching to prepaid or pay as you go plans. You also have the ability to try different companies and to find the best deal available, since you aren’t locked into a plan that you have to pay to get out of.
With prepaid, customers pay as they go, meaning they pay for each text they send and for each minute of talk time they use. When they need more time, they buy more minutes. You still need to remember that heavier cell phone users will probably be better off with a contract plan that allows for more minutes because paying for excess minutes is always an expensive endeavor.
There are other considerations to keep in mind, such as the fact that Verizon Wireless offers discounted or even free handsets with a new or renewal contract. This can save some considerable dough. Heavy phone users find that contract plans work best for them, and they get the additional bonus of heavily discounted phones. Also, if you get free mobile to mobile or what they call in-network calling with friends or family members on the same network, that’s another consideration because it can lead to big savings.
It really is a personal thing–the kind of plan you select directly relates to your personal cell phone habits. A good rule of thumb, as I mentioned above, is if you use right around 200 minutes a month, you may be able to save money with a prepaid phone.
A good way to go about selecting a new plan is by figuring out your average minutes used and also separating out the things you really need out of your mobile phone. Take out your phone bills from the last six months and see how many minutes you use. You will see some definite patterns. Then take a look at what you are paying monthly and see if there are any “bells and whistles” like unlimited text messaging or other add-ons that you don’t really use. For instance, maybe you are paying for 250 text messages a month, but you only send and receive 50. That would be something you would consider cutting out.
Once you have a better handle on your “habits,” then you will be able to make a better selection on your new prepaid cell phone. Again, if you are a light cell phone user (200 minutes a month, 3 calls a day), then prepaid might be a money-saving, worthwhile choice for you, but if you make a lot of calls (say 450 minutes a month, 10+ calls a day), then a monthly contract plan may make more sense for you.
If you’re interested in prepaid cell phones, I would definitely recommend reading my reviews of T-Mobile prepaid and AT&T prepaid to get started. Also, read a review of the Jitterbug phone, a phone made specifically with the elderly in mind. There are a lot of selections out there, so it’s important to read about all the plans available in order to find the one that works best for you. And remember, prepaid may save you money or it may not depending on your particular situation. An informed consumer saves money.
Find the best deals on Straight Talk phones and plans at Wal-Mart.com
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