No contract cell phone plans are on the rise

T-Mobile
Greg Voakes February 4 Mobile

Cell phone plans are almost as easy to understand as particle physics. There are so many plans, each with their own freedoms and restrictions, that it can be quite confusing to determine which is the best one for a particular person. Prepaid cell phones, however, take away some of the confusion by avoiding contracts and offering greater flexibility. Could this be behind their current spike in popularity?

Getting what is paid for

Users of cable and satellite TV already know that paying only for what is needed can be an annoying and impossible challenge. Hundreds of channels are paid for, but only a handful are watched. TV providers like to tout how many channels they have for the money to try to convince the consumer that he/she is getting a great deal.

The same occurs with contract cell phone plans. “Unlimited” is a word the cell phone providers like to toss around a lot. Users can get unlimited, talk, or text, or data, but do they ever really use all those unlimited features? For most the answer is almost never.

A no contract cell phone plan allows a user to pay only for what they actually use. If a given month sees a lot of phone usage, the user can pay more. If there is little usage, less is paid. While only paying for what is needed may seem like common sense, it is a big reason why prepaid phone users avoid bloated contracts.

Freedom from contracts

In a contract plan, if the needs of the user change, the plan does not. Signing that contract locks a person in for the duration. Suppose somebody moves during the contract period to an area with terrible coverage. The contract still stands. In this case, it turn that cell phone into on expensive paperweight.

In a prepaid plan, if needs change the user is able to end the plan and move to something more suitable. If a particular phone is no longer meeting a person’s needs, it can be turned in, and a newer model can be purchased. Despite the need to purchase the phone up front, a prepaid plan almost always saves money over a contracted “free” phone.

Great for teens

Parents who don’t want their teens spending every waking minute on a cell phone find prepaid phones a great option. When the minutes run out, the phone can’t continue making calls, texts, etc. This helps teens to learn to calculate phone usage and adjust accordingly.

No penalties

Perhaps the biggest reason for the rise in prepaid phone use is the absence of penalties that are incurred when opting out of a contract. Big fees for ending a plan are a real turn-off for consumers. Avoiding these potential fees is a plus that makes prepaid users more comfortable about purchasing these phones.

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