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Prepaid expands and scores well

Last reviewed: December 2011

Consider a prepaid phone

Prepaid service has established itself as the leading low-price option in cellular. Service usually costs $25 or less per month, compared with $50 to $100 per month for contract customers. Savings can run anywhere from $100 to $1,200 per year, depending on whether you're an individual or a couple and on your monthly voice minutes and data-service usage. The prepaid cost advantage is typically less for multiphone families.

The main difference between prepaid and a traditional contract plan is that you pay before you get the service rather than after you get a monthly bill, and there's no contract commitment. You can choose a pay-as-you-go plan, which charges 5 to 25 cents per minute used, with or without a $1 to $2 daily access fee or per-day-used charge. Or, for as little as $10, you can buy prepaid plans similar to traditional contract plans, with a set monthly number of minutes and fee. You can even buy unlimited-minute prepaid plans, which charge a monthly fee as low as $45 or a fee of up to $2 for each day you use the service.

Leading prepaid carriers operate on major carrier networks, often for less, and include: TracFone, whose per-minute cost is ostensibly high but can be significantly reduced with double- or triple-minutes-for-life cards and whose value-plan minutes are reasonably priced; Straight Talk, which offers unlimited voice, text messages, and Web access for $45 per month; T-Mobile prepaid, which lets you buy primarily what you want with plans emphasizing mostly data, text, or talk; and Virgin Mobile, which sells Beyond Talk unlimited Web, talk, and text for markedly less than parent company Sprint's Simply Everything. AT&T and Verizon also offer prepaid, but our subscribers rated them lower on value, along with independents Metro PCS and Net10.

The phones are widely available for purchase directly from the carriers and from Best Buy, Walmart, Target, and other retailers. Minutes can easily be bought online or over the prepaid phone with a credit card. Most prepaid and postpaid phones performed competently in our tests, with sufficient talk time and voice quality comparable to the contract phones in our Ratings (available to subscribers). These phones are often indistinguishable from contract counterparts. They range from basic conventional models with smallish displays and limited functions to advanced smart phones with large touch screens, full Web browsers, and high-speed data-network access. In fact, Verizon and T-Mobile offer most of their phones with or without a contract. One difference: Prepaid phones often tell or show you how many minutes are left in your account. Also, some of the newest, most-sought-after smart phones still elude prepaid and postpaid carrier lineups.

If you decide to go with a prepaid or postpaid phone, check the carriers' coverage maps to see whether you'll get service at home, work, and other places you regularly travel, and watch the expiration dates on minute bundles. One inexpensive option you might consider for a text-hungry teen is T-Mobile's prepaid $15 a month plan, which provides unlimited texting, 10 cents a minute voice service, and no Internet service.