Which is better: Contract Phones vs. Prepaid Phones

There is an ongoing debate in the industry. Which is better, a contract phone or a prepaid phone? Many experts insist that a prepaid phone is better because of the potential savings while other experts claim that contract phones are better because of a number of advantages. But like with most things in life, both prepaid and contract phones have their set of pros and cons. In this guide, we will try to dissect both types to help you make a sound decision in the end.

Prepaid Phones

Prepaid phones for a long time have had a bad reputation due to claims that it is the preferred type by smugglers, criminals and even drug dealers. But that perception has already changed over the years. Now, more and more experts are encouraging users to ditch their contracts and go prepaid. Here are some of the reasons why:

  • More control over your phone bill – When you opt for prepaid, you only top-up when needed, which means no wasted minutes. You also have more control over bill. You decide how much to top-up and when to do so.
  • No monthly fees to worry about – With prepaid phones, there are no fixed monthly fees to pay. You really only pay for the call, text and data services that you are using and nothing more.
  • No lengthy contracts – As opposed to getting tied to a long contract term, prepaid phones are without any contract commitment. You can switch carriers anytime you want and change SIM cards when necessary.
  • While clearly budget-friendly, prepaid phones are not without their cons, which include:

  • Inconvenience – In times of emergencies and you really need to make a call, you won’t be able to make one unless your phone is topped up with credit.
  • No free handset – You won’t get a free handset with a prepaid phone either. You need to buy one upfront, which means bigger cash to spend from the get go.

Contract Phones

With so many subscribers overspending on their contract plans, contract phones are becoming more controversial by the day. But just like prepaid phones, contract phones have their pros and cons. Let’s start with the pros:

  • Handset choice – One of the main attractions of a phone contract is the freedom to choose your own handset. As part of the plan, you get to pick a handset and pay for it over the duration of the term. There’s no need to buy a handset upfront with contract phones.
  • Bundle plan – In addition to the handset, you also get to choose a bundle plan, which includes allowances for your phone services. This means cheaper rates for your call, text and data cost.
  • Customer service – Carriers also provide customer services for phone contract subscribers. If you have network or coverage problems, the customer service team should be able to help.

Like prepaid phones, contract phones also have its set of cons:

  • Tied to one carrier – When you sign a contract, you are essentially hooking yourself to one contract. Unless the contract is up, you won’t be able to switch carriers easily. There are associated penalties and fees if you do decide to end the contract early.
  • Can be expensive – If you choose a high-end handset and a generous bundle plan that do not really suit your needs, you may end up with hefty monthly bills. This could lead to overspending because you’re paying for services you’re not really fully maximizing. Choosing the right bundle plan, therefore, is crucial if you’re going for a contract phone over a prepaid phone.

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