5 Reasons to Consider Prepaid Phone Plans

[qi:112] In these worrisome economic times, cutting costs is top of mind for many. But choosing a prepaid cell phone plan can be an easy and relatively painless way to save money. According to 2008 data from the Cellular Telephone Industry Association, of the 262 million cell phone subscribers in the U.S., only 16.9 percent of them are on prepaid plans. That’s far less than in other countries, including most developed nations, where the range runs from 37 percent all the way to 89 percent of the cell phone market, according to the CTIA. I doubt we’ll ever get to that 90-percent penetration mark, but below is a list of five reasons that a prepaid plan might be right for you.

  1. If a plain-old phone will work for you, and you’re willing to buy it up front: Most cell phones sold with contracts are subsidized by the carrier, which can help when purchasing a BlackBerry (s rimm) or an iPhone (s aapl). But if you can tolerate a lower-end phone, a prepaid plan might work for you. For example, a refurbished Samsung A117 phone costs $19.99 from AT&T (s t), while several basic refurbished Nokia (s nok) models are sold for $9.99.
  2. If you keep your phone beyond the 2-year contract period: Prepaid services require a phone purchase up front, but for those who don’t switch phones or like using their old ones (surprisingly there are some GigaOM staffers who fit into this category), eliminating the contract also eliminates the prepaid phone subsidy carriers build into their monthly plan fees.
  3. If you talk less than 200 minutes a month: Plans from T-Mobile, Leap Wireless (s LEAP) and MetroPCS (s PCS) are generally more economical than the cheapest post-paid plans from national vendors.
  4. If you have a bunch of friends and family members who are on different carriers: If you’re the only one with Verizon (s vz) service in a family of Cingular users, you’re not able to take advantage of the ability to talk to friends and family who are in-network for free. And while you could switch carriers, you might find that a prepaid plan better meets your needs. Some providers, including AT&T, have prepaid plans that allow for unlimited in-network calling.
  5. If you rarely roam: This might not work for many of our readers, but it might for their kids. For those on family plans, choosing a prepaid option for a teen who doesn’t travel might make sense. Some prepaid plans offer “local” unlimited calling for as little as $30-$35 a month, including text messaging and picture messaging.