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Save Money By Using Prepaid Wireless

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I've been meaning to write an article on prepaid wireless service and the benefits, but have not had the proper motivation until now. I was reading this article about people giving up cell phone contracts on the NYTimes Technology section and decided to put my thoughts on the matter.

There are many reasons why someone would opt for a prepaid service, instead of the standard contract that most people have on their cell phone service today. Visitors from other countries may want a temporary phone during the stay in the US, you may want a backup phone for emergencies, you don't want to pay overages anymore, you're sick of hidden fees, the list goes on.

I started looking into prepaid cell phone services when I had a need for a secondary cell phone that will not be used very often. It did not make any financial sense to obtain a one or two year contract when all I wanted to do was a phone that is used primarily as a backup or for emergency calls. So I opted to look into prepaid wireless services.

First I asked around in stores, and started off with Verizon's prepaid service. I read some information on their "plans" and decided it was not exactly what I was looking for. There seems to be some kind of service commitment attached to it as well. So I did a bit more hunting around and then found other carriers. After a bit of research, I decided I will go with either T-Mobile or Tracfone. My advice on looking for a prepaid plan is to know these three items:

Know your calling patterns - if you only use about 200 minutes a month, why pay for 500? If you continue to have overage monthly, then switch to a plan with more minutes. When it comes to prepaid, its the same thing, but what you need. If you really will be making hundreds of minutes worth of calls monthly, go with one of the new unlimited plans.

Buy the right plan for you - This is basically comes down to knowing your calling patterns. Don't buy more than you need and don't buy less than what you need. Learn a lesson from Goldilocks, and get it just right!

Getting the phone you want - Not all prepaid plans will have the phone you need. Much of the cost of phones are usually absorbed by the carrier when you sign up for a monthly contract. So by going the prepaid route, you will most likely pay more for the phone you want. In my case, I just needed a phone, and I got a free one to boot!

Services and available Carriers
I've listed those I looked at and a few more. Also reasons why I didn't choose it.

Verizon Wireless Prepaid
- The Goliath in the North East US. They have enough business, no wonder their prepaid service isn't that enticing. You pay 99 cents for everyday that you do use it, AND pay for the minutes you use.
Sprint Nextel - I didn't go for this due to network coverage. Plus monthly plans didn't make sense for my current needs.
ATT (Cingular) - Also comes with a daily access fee, like Verizon. I didn't go for the GoPhone.
T-Mobile - This seems to require a contract for what I was looking at, so I didn't go for it.
Tracfone - Uses the ATT networks. You can buy a "tracfone" in many stores including
CVS, RiteAid, etc..
Jitterbug - Simple cell phones Minimal minutes. Check out their plans here. This seems like a good plan for those needing very few minutes, but I would still go for something else.
MetroPCS - This came to NYC very recently and looks promising. At $40 / month I may use this in the future.

So what did I choose? I went with Tracfone. If you follow me on Twitter, you may have seen some tweets about it. Tracfone had the flexibility and cost model that I was looking for. Plus the fact that I ended up with more bonus minutes than I purchase didn't hurt! I basically bought a used phone (free) along with the 400 minute card for $100 plus tax. I ended up with over 1100 minutes of calls. I think that is a bargain. What about you? Do you use prepaid phones? What service did you choose and why? Share your thoughts in the comments.

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Photo by Refracted Moments

7 comments:

PrepaidWirelessGuy said...

Couldn't agree more; there's a lot of money to be saved by going prepaid. I'm still amazed, however, how many people comment on tracfone being the best. I know they have a strong affiliate program, and they do offer a great deal, but there are so many other options out there. I personally find their "units" approach to be a little confusing, but that's just me. Anyway, tracfone is a great option to consider, but there are others, so I would recommend that people compare plans and then choose the one that best meets their needs. I've tried to compile the major offerings here:
http://www.prepaid-wireless-guide.com/compare-prepaid-plans.html

FrugalNYC said...

Hi PrepaidWirelessGuy,

Thanks for the comment. If I only knew about your site while I was looking. Though, I think your site contains way more information than I need.

I went with tracfone because of the 1 year card. It gives me enough time to use up the minutes I would have purchased. As I said on the post, this fits my needs. Others will have different needs. I think checking your site out and comparing all the available plans would be helpful to determine that.

One thing I do like about tracfone, and I mentioned it above, is the fact that you can go to your local CVS and pick up a phone and minutes card and start using it very quickly.

I didn't know about the affiliate program for Tracfone, perhaps I can look into that ;) Thanks!

FrugalNYC said...

In case anyone is interested this is the Tracfone affiliate program link

Keith said...

Something else to remember about TracFone is that they always have promotional codes available that you can use to get bonus airtime whenever adding minutes to your phone. They are easy to use and free airtime is better than no free airtime!

I give some tips on a page on my site about how find and use TracFone Promotional Codes that you might find helpful.

FrugalNYC said...

Hi Keith,

I agree, the bonus codes make it so much more compelling to go with Tracfone. I didn't know about the bonus minutes until after I had purchased. I did find out about them before activation, and that's how I ended up with over 1000 minutes rather than the 400 :)

Thanks for the helpful info on your site. I know my readers will find them helpful.

Dave B said...

Thanks for the article. I've been using prepaid for about 5 years (Virgin Mobile) and it's fine. Except that the phone choice is quite limited, and none of the phones do the Web well (to put it mildly).

My rates are 25 cents a minute for the first 10 minutes in a day, then 10 cents/minute after that. No daily charge, no minimum amount of minutes to buy, all the minutes roll over as long as I add at least $15 to my account every three months.

That NYTimes article mentions a guy who bought a Sidekick for full price, then got a T-Mobile prepaid plan for it. But when I go to T-Mobile's Web site it doesn't seem to offer the option for using a Sidekick with that carrier.

I'd definitely be interested in using a Blackberry, Sidekick, or other smart phone on a prepaid arrangement, if it's possible.

FrugalNYC said...

Hi Dave B.

I looked at Virgin Mobile as well, but didn't like the pricing for my needs at the time.

I think MetroPCS allows you to use Blackberry and perhaps sidekicks. I've definitely seen Blackberry use being advertised. I may look into that in the near future myself.

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