Choosing the correct SIM for you can be tricky, especially with prepaid and postpaid plans. When deciding which plan is right for you, assessing what you want out of your phone usage is essential. Do you make regular calls, or are you more prone to using much data?
What are prepaid plans?
A prepaid plan means you pay for your phone bill upfront. Similar to pay-as-you-go, most people will link a credit or debit card to their account, allowing them to repay their plan after the period is over automatically. With a prepaid plan, you pay for a set amount of data before you use it.
Prepaid allows you to cancel at any time without paying fees or switching to a different phone plan.
If you don’t want to link a debit or credit card, you can use recharge vouchers purchased in person, available in stores across Australia, including Woolworths, 7-Eleven, and much more.
The benefits
Prepaid plans have many benefits. You’ll likely be able to find a cheaper phone plan and enjoy more flexibility while receiving the same amount of data as you would with a postpaid plan. Here are the main benefits of choosing a prepaid plan.
- Cheaper plans. Prepaid plans are often cheaper than postpaid, with most plans starting at around $10 per month, compared to the average US postpaid phone bill of $114.
- No hidden fees. Say goodbye to hidden fees with prepaid plans. Since you’re paying upfront for all your usages, your services will be paused once you’ve reached your data or call limits. With prepaid, you’ll know your plan costs every time.
- Better coverage. While in the past prepaid plans didn’t have the same benefits as monthly contracts, they now offer the same benefits as postpaid, as well as extra features, including mobile hotspots and internal streaming add-ons. However, be aware that this may cost extra.
- No credit checks. Since you pay upfront when taking out a prepaid plan, you won’t need to sign a phone contract, and therefore creditors won’t need to perform any checks on your score (since you’re not borrowing anything).
- More flexibility. Because there’s no contract involved with a prepaid plan, you can pay for, adapt, or cancel your plan at any time.
The drawbacks
- Less data. While prepaid plans are often cheaper, you’ll likely have less data available and must pay for a top-up more often than with a monthly contract.
- Time limits. Some prepaid plans offer unlimited data and calls. However, the vast majority will impose limitations on how much you can use and how much data and call minutes you can use in a day.
What are postpaid plans?
Most phone bills work as postpaid plans and refer to receiving a monthly bill that highlights what charges you’ve acquired during the month. Your charges will either be the same each month, or you could incur extra charges if you’ve used more data than you should have over the month.
With a postpaid plan, you pay for services you’ve used over the month, including calls and data.
The benefits
- Stay connected. With a prepaid plan, once you’ve run out of data, you’ll need to physically top up your data and calls by making an up-front payment. However, with a postpaid plan, you’ll always stay connected, even if you exceed your monthly usage cap.
- Pay less for international calls. Most postpaid contracts allow you to make far cheaper international calls compared to prepaid, primarily if your service provider supports the country you’re in.
- Better benefits. Most postpaid plans offer extra benefits on top of phone usage as an incentive, such as free subscriptions, international roaming, and unlimited calls. For example, many phone providers, such as Mint Mobile and Unlimited, offer unlimited data and calls.
- Multiple plans. If you’re paying for your family’s phone contracts, switching to a group postpaid plan might be cheaper. Rather than prepaid, you’ll pay one set fee per month that is often discounted and could save you significant cash.
The drawbacks
- Wasted data. Unlike a prepaid plan, postpaid means you’ll pay for your set data usage at the end of the month. If you use fewer data than you’re assigned, you won’t receive a discount and will be charged the total amount. There’s, therefore, less flexibility with a postpaid plan.
- Security deposit. After signing a phone contract, you’ll likely be charged a security deposit unless you have an above-average credit score. However, with prepaid, you won’t face credit checks and will instead pay for your phone plan before you use it.
Prepaid vs. postpaid plans: what’s the difference?
Whether prepaid or postpaid is right depends on what you want from your phone contract. If you’re still unsure which to choose, here are the main differences between prepaid and postpaid SIM plans.
- Prepaid plans are often significantly cheaper than postpaid. However, they often have fewer benefits and data usage compared to postpaid.
- Postpaid plans are more efficient than prepaid since you pay monthly automatically. However, your plan could incur extra costs if you exceed your limit. With prepaid, you won’t face any hidden costs and will instead need to top up your plan.
- With a postpaid plan, you’ll receive better benefits compared to a prepaid plan, such as free subscriptions and international roaming data.
- Unlike prepaid plans, postpaid often offer family plans which could save you significant money when paying for multiple contracts.