Should you choose a prepaid or monthly phone plan?
Without a doubt, the landscape for all types of cell phones -- prepaid and postpaid -- has shifted dramatically over the last year. Prepaid cell phone plans require no commitment and no credit check, and that's been one of their chief attractions. Now, however, postpaid carriers have been staking out some of the same ground.
Contract-free traditional cell phone offerings have always been available from some carriers. What's changed is that no-contract plans (you'll still need a credit check, however) are being offered in some shape or form by all of the nationwide carriers, sometimes in conjunction with early trade-in programs that make it easier for users to get their mitts on the latest phones. In the case of T-Mobile, contract-free plans are the only type available. More information on postpaid phone plans can be found in our report on cell phone plans.
But while postpaid phone plans are looking more and more like prepaid plans, the reverse is true as well: Prepaid phone plans have begun to resemble postpaid plans. Once viewed only as a cheap solution for the credit challenged, prepaid cell phone plans have evolved into a viable alternative for all cell phone users. A variety of plans are available, including offerings with unlimited talk, text and data, and many cost less than what's available through current traditional plans. Phone selection, while still limited compared to what you can get via most traditional carriers, has grown tremendously, to the point where some prepaid carriers offer at least a few of the latest and hottest smartphones. (For reviews of over 300 cell phones, see our lists of best prepaid phones and best smartphones.)
So, then, is there any reason not to opt for a prepaid plan? For those willing to live with a two-year commitment to both their carrier and their chosen phone, postpaid plans (except for those offered by T-Mobile) continue to offer subsidized phones that can knock hundreds of dollars from the cost of the device in the case of the latest and most powerful smartphones. That can sometimes bring the cost of service over two years below those of postpaid plans (in which you always pay full retail for your device if you need a new one). The trade-off is that if you change your mind before your contract is up, you leave yourself subject to hefty termination fees and responsible for any remaining value of the phone.
Most prepaid providers are either prepaid brands offered by national carriers (for example, Virgin Mobile is owned by Sprint and uses Sprint's network) or MVNOs (Mobile Virtual Network Operators) that cobble together service by buying access at wholesale from the major nationwide providers (for example, TracFone buys access from AT&T, Verizon, T-Mobile and Sprint) and reselling it. But features can sometimes vary greatly. For example, while Sprint users can roam on Verizon's network in areas that Sprint does not serve, Sprint-owned Virgin Mobile users can't roam off-network at all. That's not a major issue for most, but can be a concern for those who travel frequently. Those interested in the latest smartphones should be aware that while the situation is improving with some carriers, access to LTE data speeds is often limited or not offered at all, even in areas where the host provider has an LTE network in place.
To find the best prepaid cell phone providers, we looked at large customer-satisfaction surveys, such as those conducted by ConsumerReports.org, J.D. Power and Associates and PCMag.com. We also looked at reviews and comparison articles at sites such as CNET, GottaBeMobile.com, Kiplinger and elsewhere. We rate carriers on their plans, but also on factors such as network performance, quality of customer service and selection of available phones to find the best prepaid cell phone plans, along with a few alternate choices that could be worth considering.
Elsewhere in this report:
Best Unlimited Prepaid Phone Plan: Who offers the best unlimited prepaid plans? We compare talk, text and data offerings from the top prepaid cell phone carriers.
Best Pay-as-You-Go Cell Phone Plans: Pay-as-you-go plans are pricey, but can still be a good option for some. We look at top plans for occasional cell phone users and international callers.
Buying Guide: Need help choosing a prepaid cell phone plan? We outline what you need to consider in this buying guide, which also names the top choices.
Our Sources: Links to the expert and user reviews we used to select the top prepaid cell phone plans, along with our assessment of each reviewer's expertise, credibility and helpfulness.