What’s the difference between prepaid and postpaid mobile phone plans?
When you compare mobile phone plans, you’ll often see two types: prepaid and postpaid. While the names are supposed to be obvious, the difference between the two isn’t always completely understood.
So, let’s dive into what prepaid and postpaid mobile plans are, have a look at the pros and cons of both, and help you to work out which type of plan is better for you.
What is a prepaid mobile plan?
Prepaid mobile phone plans let you pay up-front for a certain amount of data, text and call credit. Once you run out of credits, your prepaid plan expires. Some will have an expiry period, too. So, watch out for those.
When your prepaid plan expires, you can compare prepaid mobile plans to find a new one (and take advantage of the latest offers) or simply recharge your data, calls, and text credit.
Some people opt for prepaid plans in order to avoid paying for excess data or call usage charges after going over their plan’s limit.
Prepaid plans come in a few different shapes and sizes. There are month-long prepaid plans, long-expiry plans (3 to 12 months), and pay-as-you-go (PAYG) plans.
What is a postpaid mobile plan?
With postpaid mobile phone plans, you will pay at the end of your billing cycle – which is usually monthly.
Paying for it at the end of the billing cycle allows telco providers to charge you for going over your data, call, or text allowances for that month. While that’s annoying, it also means that you won’t be cut off from your cell service if you hit your limits, as is the case with prepaid plans.
Customers looking to budget will need to be extra careful with postpaid plans, as excess usage charges can be comparatively quite expensive. That is, unless you find a plan with no excess data charges – although you’ll be rolled over to slower data speeds for the rest of the cycle.
You can most commonly find postpaid plans on a month-to-month basis. But you can also opt for 12-month contracts that typically offer more data than month-to-month plans, as an incentive to lock in for a year.
Postpaid plans come with a range of data inclusions, so there’s likely one or two out there to fit your needs. Before you compare postpaid plans, make sure you work out how much data you need. That’ll give you a better idea of what to look out for.
Pros and cons of prepaid vs. postpaid phone plans
✓ Know what you’re paying up-front
✓ Choose when you want to recharge
✓ No bill shock from excess data charges
✓ More ways to purchase or re-fill (e.g. convenience stores, telco stores, online)
✓ No lock-in contracts make it easy to switch providers whenever you like
✗ Data, text, and call credit can run out
✗ You may have to recharge more times a year than a postpaid plan if you regularly exceed your limits
✗ You may encounter slightly slower data speeds than postpaid plans
✓ Your plan won’t lock you out for reaching your data limits
✓ Often come with unlimited talk and text
✓ Data speeds (on standard data) may be quicker than prepaid data
✓ Fixed billing date
✗ Can be more expensive per month if you exceed your limits (top-ups can cost $10/GB)
✗ Slower (capped-speed) data after reaching your data limit
✗ Late payment fees can be expensive
Should I go with a prepaid or postpaid mobile phone plan?
When selecting a new mobile phone plan, you need to weigh up the pros and cons of prepaid and postpaid options.
If you like the flexibility of being able to change your plan at any time, knowing exactly how much your plan will cost, and being able to buy a plan virtually anywhere, then prepaid plans might be the right option for you.
However, if you’re after convenience, like staying connected at all times whilst out and about, practically unlimited data (not to mention typically larger inclusions), and the consistency of a fixed billing date, then postpaid plans might be a better fit.