Comparing cell phone plans

Every time you look around, it seems someone is on the phone. In the grocery store, the movies, sometimes even in church.

And in this economy, more and more people are choosing pre-paid cell phones over the traditional “contract” cell phones.

According to the Telecommunications Industry Association, there are more than 40 million pre-paid cell phone users in the United States. That’s about 17 percent of all cell phones, and that number is growing fast. 

But is a contract cell phone or pre-paid plan better?

These days, mobile phones are sleek, slim and everywhere. And just like the style has changed, so has the way people get them.

Meaning, more people are choosing to go with pre-paid phone plans, rather than getting a contract.

Suhail Asad, owner of Cellular Express in Birmingham, has been in the cell phone business for 9 years.

He says these days, lots of people are opting to pay in advance.

“From 70 percent to 95 percent, almost, in my business,” Asad said. “The prepaid is more convenient. It’s more flexible. It carries the same really, weight as the contract phone.”

Dewayne Yancey used to have a contract phone, but decided to switch over to a pay-as-you-go.

“A lot less money, you don’t really have to deal with the unnecessary stuff,” Yancey said. “You just take ‘em $50 and you hit the boost.”

It used to be that pre-paid was a packaged phone hanging in a convenience store. Not the case any more.

These days, just about all, if not all the major companies offer cell service without getting into those long-term contracts.

Places like Walmart recently started offering pre-paid plans. And it’s not just for a phone call either, it’s more.

Yancey’s plan offers unlimited texting, unlimited airtime, and unlimited internet for just $50 per month.

“You’ll have to keep up with that monthly payment every month, it’s not gonna be billed to you. You just have to walk into our location and make a payment on that phone number that you carry,” Yancey said.

But which plan is best for you? Here are some facts to consider.

With prepaid service, there are:

No contracts, no monthly bills, no credit checks, no deposits, no age limits, and usually no activation fees.

Consumer Action national spokesperson Linda Sherry said there is a flipside to that, though.
“The phones, you do have to pay for them at their full price, but there are many phones that start at only $20,” Sherry said. “And you can also get up into some higher-end phones and PDAs and that sort of thing with the pre-paid cell phone plans as well.”

With contract phones the advantages are:

Fixed rates for minutes unless you go over your maximum, and a huge variety of available phones and devices. Many features like data, TV feeds, e-mail, and picture phones, are only available for long-term contracts. There are free calls to others in the same network in many plans, and free calls to others in your plan. And there are lots of minutes per month on some plans.

Our consumer expert says there is one thing pre-paid cells offer that contract phones can’t.

“Many consumers find pre-paid cell phones good for them because they have damaged credit history and you usually have to have a pretty good credit history to get a contract based cell phone plan,’ Sherry said.

Which helps keeps Asad in business these days… that and something else.

“Not a lot of people like to give away their detailed information anymore, like your social security name, address. You just walk in pay for what you want and don’t have to be obligated to all this - especially with the credit crunch going on, ya know.” Asad said.

So these days, with such a variety of options and pros and cons., which plan you choose really is your call.

If you are buying the phone for emergencies only, then the pre-paid cellular phone may save you more money in the long run.

Pre-paid is also a way of learning about your usage patterns before committing to a long-term monthly billing wireless contract.

There are a lot of new companies offering pre-paid plans. Some may allow you to use your current phone.

Before choosing any plan, you should do some research to find out which ones offer the best coverage for your area.