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How Pay-as-You-Go Smartphones Save Big

Bad Credit? Hate Contracts? Here's What to Do

by Merlin Dean

image - iphone modelSome people have terrible credit, therefore they either get turned down by AT&T, Verizon or Sprint, or they have to pay huge deposits.

So many people turn to "pay as you go" plans, or prepaid. There's no contract. You simply pay ahead of time and you can leave the company whenever you want. These plans can save you alot of money compared to the usual two-year contracts issued by the major U.S. carriers.

It used to be that these prepaid plans offered horrible, basic phones only. But because of competition, most carriers now include smartphones with these plans.

That means you can now use a prepaid iPhone or Android smartphone with AT&T, Verizon, Sprint or T-Mobile.

If you suffer from past mistakes and have bad credit, you really have no choice but to go with the pay-as-you-go plans.

But if you do the math, you'll see that you can save hundreds, and sometimes over a thousand dollars compared to being stuck in a two year contract.

Now you know why many budget-minded families and college students are utilizing prepaid smartphones.

The only downside? You have to pay the full retail price of the smartphone, and the sticker shock isn't pretty.

Instead of paying $600-$800 for a new iPhone, my advice is to go thru or Ebay to buy a good, used iPhone 3GS or iPhone 4 for anywhere from $150-$400.

Let's compare: normally a two-year contract with a 16GB iPhone 5 would cost over $2,000 with AT&T, Sprint and Verizon.

Virgin Mobile, which is ownded by Sprint, charges $700 for a new iphone 5. Of course the iPhone 4 is less but you get the point, it ain't cheap.

Compare that with AT&T or Verizon, where you pay a subsidized price of $199 for a 16GB iPhone 5. Then add in the $90 a month for Data, Texting and Talk (450 minutes) and you're looking at a whopping $2,400 over the two-year life of the contract. Sprint is a few hundred dollars cheaper but you get the point.

But what if you paid full price for an iPhone 5, which is from $600-$900, depending on a 16GB or 32GB or 64GB? Or a used iPhone 3GS or iPhone 4?

Well then compare the prepaid costs -- for unlimited talk, unlimited text and data, your costs would be only $1,600 over two years. Or you can go with the $30 monthly plan (which is 300 minutes) and your fees would drop to only $1,370. You would save over $1,000 compared to AT&T or Verizon!

At Virgin Mobile they offer an Unlimited Everything Plan but after two years it would cost around $1,800.

There are other low-cost carriers, but you do sacrifice performance for price. The data speeds and reception can suffer compared to the major carriers.

There's a company called Cricket Wireless that offers a monthly plan for $55, and for a new iPhone 4S they charge $500. After two years the costs are $1,820. The nice thing about Cricket's iPhones is that they are unlocked and can be used internationally. A big plus for travelers.

The downside is that the Cricket iPhone is locked in the U.S., just like Verizon. That means if you want to switch carriers, you have to get a new phone number, which can be inconvenient for your life or business.

One more thing -- if you go over 2GB Data use per month, Cricket, Verizon and Sprint will purposely slow your data speeds to a crawl.

Both carriers use the Sprint networks, which are already among the slowest in data speeds according to independent testing.

Thinking about using Android for prepaid? Be careful, so far the only Android smartphones available are the low-performing Android models.

One exception is the Google unlocked Galaxy Nexus. It sells for $350, is 4G, and has 16GB memory to hold pictures, videos and data. It works off the Android 4.0 operating system, and is upgradeable to the newer and more efficient 4.1 version.

It works around the world and can be used with prepaid plans from AT&T, Verizon, Cricket and Virgin.

So remember, depending on the smartphone you choose, going with a prepaid plan could save you a substantial amount of money compared to the two-year contracts.

Author Merlin Dean is the founder of Poole of Knowledge Publishing. He creates websites that make smartphones easy to understand.

© Merlin Dean
September 2012


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