Money Saving Tips

Top Ways to Save Money on Mobile Phones

Top Ways to Save Money on Mobile Phones
Written by Irina Vasilescu

Android or iOS? iPhone or Samsung? AT&T, Sprint or Verizon? Prepaid or cell phone contract? If you need a mobile phone, these are just some of the questions that you have to answer. In today’s constantly interconnected world, you almost cannot survive without a mobile phone.

Aside from using it as a communication tool, mobile phones have become an all-in-one gadget which people use to check their e-mail messages, listen to music, play games, watch videos, browse the Internet and more.

In the following sections, we will take a look at which type of mobile phone subscription you can save on: prepaid or contract. We will also be dishing out additional tips on how you can save money when looking for mobile phones.

Option 1: Pay-as-You-Go Mobile

Also called pay-as-you-go, pay and go, prepay, pay-as-you-talk or prepaid wireless, a prepaid mobile phone requires advance purchase of services used. For mobile phones, the advanced credit will be used up only when accessed or consumed.

Let’s say that you purchased a $49.99 prepaid plan from a mobile carrier offering pay-as-you-go service. For this amount, you can consume 400 minutes of talk time. There are also mobile phone carriers for prepaid which include data service and text messaging service on their plans. Another variation of this is a day-by-day offer, where you will have unlimited access for just $3 per day.

The way that pay-as-you-go mobile service works depends on the carrier. However, the general idea is that you will be paying a fixed amount for a specific number of calling minutes which may or may not include data and MMS services.

Without committing to a contract, you can use the phone whenever you want, although you need to make sure that you have sufficient credit for it. Once you have used up all the credit, you would need to top up the prepaid plan again.

If you have a pay-as-you-go mobile plan, using up all the credit will force the network to deny the call that’s being made. But as mentioned earlier, you can top up your credit anytime using several payment mechanisms:

  • Via credit card or debit card.
  • Via electronic reloading.
  • Using direct debit from your bank account (via ATM cards).
  • Using swipe cards on retail stores where the balance on the card is credited automatically.
  • By buying top-up or refill cards at certain stores. The cards have unique codes which should be entered into the phone to add credits to the balance.

Interestingly enough, prepaid mobile service came in late in the industry. Prior to its introduction in the 1990s, only post-paid services were available for cellular phone subscribers.

Option 2: Contract Mobile Phones

If you think that you’re making too many calls on a monthly basis so a prepaid mobile would be inconvenient, go for contract mobile phones. As the name implies, you will be purchasing a mobile handset under contract with a mobile phone carrier. As a subscriber, you will be paying a single monthly fee to the carrier for a fixed period of time.

Depending on the carrier where you will get the plan from, you can sign for an 18-month or a 24-month contract. What’s included depends on the plan that you are signing up for, but rest assured that there are several plans to suit the calling and data needs of different subscribers.

What’s good about going for a contract mobile phone is that you do not have to worry about topping up your phone credits. Let’s say that you have an urgent call at the office to make but you have a prepaid mobile. You ran out of credit, so you need to look for a store which offers electronic reloading. 

With a contract mobile phone, you don’t have to worry about running out of credit because the minutes are already included with your monthly contract. Should you exceed the allowable number of minutes, you can still make the call through your mobile phone carrier – although charges do apply.

Another benefit of going for a contract mobile phone is that you can get the latest handsets for free. If you want to upgrade from iPhone 5c to iPhone 5S, for example, you can do so through your mobile phone carrier. To make switching networks tempting for subscribers, mobile phone carrier companies typically offer additional perks on their subscription plans.

Depending on the plan that you will get and the handset that you want, there is a specific number of minutes, texts, data and monthly fee associated with contract mobile phones. Also, you would have to choose how long you want to be under contract with a certain carrier.

Which Plan Saves You More? Prepaid or Contract?

Now that you already have a basic idea about how contract and prepaid mobile phones work, how would you know which plan saves you more money? Here are a few things to consider:

Pay-as-You Go Mobile

First, when is it a good idea to go for prepaid mobile? If you frequently call friends or family for hours on end, this may not necessarily be a good idea for you. Not only would you have to worry about topping up your credits every time you make a call, but it might also end up being more expensive in the long run.

Prepaid mobile is a great idea for those who do not make calls that often. Let’s say that you simply want to have people from work or the occasional family members to have a way to get in touch with you, a prepaid mobile phone is your best option.

Based on the mobile carrier that you will go with, you can purchase a $50 credit all in one go or choose a day-to-day plan. It’s all a matter of deciding which one ends up being cheaper.

Another benefit of pay-as-you-go mobile is that they are flexible and adaptable. You can pay for a prepaid wireless plan that’s charged on a monthly basis. Cancel anytime and you would not have to pay for termination fees.

The biggest disadvantage, however, is that you will not be subsidized with a new handset. Unlike monthly mobile phone carriers where the handset is already included with the contract price, you would have to look for a brand new phone yourself. In the US, some of the best prepaid mobile carriers are Boost Mobile, Cricket and Virgin Mobile.

Monthly/Yearly Mobile Phone Contracts

Now, if you do make a lot of calls per month and you subscribe to mobile data plans, you use your phone to download music, check your e-mail, etc., you may want to sign up for a monthly or yearly mobile phone contract. Getting a free handset is the number one reason why most subscribers go for this type of a mobile phone subscription.

If you want to always have the latest versions of your favorite smartphone brands, then a mobile phone contract ends up being cheaper for you.

As compared to pay-as-you go deals, you might end up having cheaper bills with monthly or yearly mobile phone contracts. However, it still depends on your calling habits and data usage. Most carriers offer free line rental deals as well as free gifts and plenty of extras.

If you are looking for a mobile phone contract, you are the winner in the end as a subscriber because the competition between carriers is stiff enough for them to offer great deals.

More Ways to Save Money on Mobile Phones

Finally, what are the additional ways for you to save money when looking for mobile phones?

Know what your calling habits are

Before making a decision between prepaid and contract, it is best to determine what your calling habits and data usage are. If you talk for an average of 300 minutes per month, would it be cheaper to go for prepaid or contract?

If you’re a heavy data user, you may want to look for mobile phone contracts with unlimited data – something that’s usually available on contract mobile phone deals.

Get last year’s model

With phone manufacturers releasing a new model of their phones every so often, the latest model that you have right now may be out-dated after a couple of years. As such, you can get lower prices on last year’s model instead of going for the latest, more expensive handset.

Ask your friends what they use

The rates and plans offered by different carriers vary from state to state, so choosing between carriers and plans is a matter of personal preference. If you cannot decide between prepaid and contract, ask the opinion of friends and colleagues at work. They should be able to give you an idea about which companies work and which ones offer better deals.

Compare different offers

Lastly, make an informed decision by comparing the different plans available online. There are websites which publish charts that show how many Gigabytes of data, calling minutes and text messages are included with different plans. When you make a side-by-side comparison of these details, you can decide which mobile phone plan will give you the best value for your money.

About the author

Irina Vasilescu

Irina Vasilescu is our crafty designer. She joined the team three years ago and is also involved in the writing process.

11 Comments

  • My mother uses a pay-as-you-go service, and she is very happy with it. She didn’t want a contract or a monthly bill, but she wanted to stay connected in case of emergency. Even though her device is only a feature phone, she can access the web, text, take pictures and even play a few games. She does not use these features very often, but it’s nice to know that they are available even on pay-as-you-go devices.

  • I prefer Pay-As-You-Go compared to contracts simply because I’m not locked into anything and usually it’s cheaper too. Saves the hassle of having to pay a monthly bill, and I can top up $40 a month and it would be enough, compared to $80 for a contract of similar features (through Optus Australia). I can still make calls, text, surf the web, and all the stuff you can on a normal plan for less. Also, I use a Sharp 007SH which is a flip phone/Android hybrid, and I find it much better than smartphones being made nowadays.

  • I love pay as you go as well. The best part about it for me is that if I am particularly short on money in a given month, I just don’t top it off. Sure it leaves me without a phone for a few days but that’s better than facing an overdraft fee for contracted service! Also, some pre-paid carriers do offer free or extremely cheap phones along with their service – StraightTalk for example has some low-end phones you can get for free if you order service online. It’s not going to be a new iPhone, but if all you need is a phone that can receive calls, texts, and voicemails, it’s good enough.

  • Another one is to avoid the iPhone, if you really want to save a lot of money. Just kidding. I agree with the contract and pay-as-you-go services, it’s really up to how you use your phone but I find the monthly contract to be cheaper in the long run.

  • I’m on a prepaid plan as well. I miss my iPhone but I would rather save money at this point. I can buy a phone card for $20.00 every few months and be fine. I cancelled my contract about a year ago and I can’t believe how much I was paying. It was robbery.

    I also hated being locked into a contract for two years. I’ll probably never go back to a contract plan as there are now so many different plans offered for customers.

  • This information is very helpful. I currently have a contracted plan but I’m looking to change to a prepaid plan to save some money. I’ve been researching the different providers to see who offers the plan and coverage to meet my needs. Thanks for sharing.

  • Knowing what your calling habits are is definitely the most important step to knowing which option is right for you. My mother hardly needs to call anyone, so her prepaid phone has saved her a ton of money. Great guide, thanks for sharing!

  • Thank you for sharing this article. This will help me save money and use it to other essential needs. The use of online shopping really helps you to navigate and search quality cellphones. Also this saves time and money for you.

  • Great article. Pay as you go seems like a really enticing idea. Anyway, thanks for all the info, it’s very helpful.

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