Is there any reason not to get a prepaid phone?

Prepaid mobile plans can save consumers beaucoup bucks. So is there any reason to not to go prepaid? Ask Maggie's Marguerite Reardon answers.

Prepaid may be the way to go for savvy smartphone consumers, as more and more wireless operators are offering cool devices with their cheap prepaid plans.

It used to be that prepaid cell phone users had to sacrifice the ability to get cool devices for cheap service. But that's not true anymore as carriers like Virgin Mobile get top of the line Google Android handsets and even offer the popular Apple iPhone. Consumers can save hundreds, if not thousands, of dollars on prepaid services compared to so-called post-paid services, which require a contract. In this edition of Ask Maggie, I make the case for one Sprint subscriber to ditch post-paid and go prepaid. I also clear up some confusion for another Verizon Wireless customer who wants to know if he can keep his unlimited data plan.

Why not prepaid?

Dear Maggie,
In a couple of months time I'm coming to end of my contract with Sprint. I've had zero problems with them or with the service they've given me.

But I'm wondering if they're worth the cost versus prepaid. I'm paying $100 per month for Sprint and looking at a number of prepaid services. I can get comparable service for about $50 a month.

Other than not getting the latest and greatest phones, are there any other downsides to this approach? If it's so much cheaper to go prepaid and the service is comparable, why would anyone be on contract?

Thanks,
Chris

Dear Chris,
You bring up a very valid point for a lot of consumers. And the short answer to your question is that it probably doesn't make sense for you to spend $100 on Sprint service when you could probably find a comparable plan on the prepaid brand Virgin Mobile for much less.

Virgin Mobile is a prepaid service that is owned by Sprint. It actually uses Sprint's CDMA and WiMax networks. So if you get good service with Sprint now, you'll still get good service if you switch to Virgin Mobile.

While it used to be true that you had to sacrifice cool phones by going prepaid, that's no longer the case. For example, Virgin Mobile offers the HTC Evo V 4G. It's the same phone that Sprint offers on its network. Virgin Mobile will also soon offer the iPhone 4S.

A quick comparison of the plans shows that you'd pay half the price for your Virgin Mobile prepaid service compared to the same service offered on Sprint. Virgin Mobile's unlimited talk, text and data plans are $55 a month. Meanwhile, Sprint charges $110 for the same unlimited, talk, text and data service.

But there are a couple of things you should be aware of with these prepaid plans. For one, on Virgin Mobile, the unlimited data isn't really unlimited. Users who use more than 2.5GB of data per month will see their speeds slowed down to 256Kbps or below for the rest of the month. That means slower page loads, slower file downloads, and more lag-time for streaming media.

But unless you're a very heavy data user, you probably won't get close to using more than 2.5GB of data per month. So this so-called cap probably won't affect you. And if you do happen to exceed the cap at some point, you won't be charged extra for the overage.

That said, Sprint says that its smartphone data plans are truly unlimited. The company doesn't charge extra if you go over your limit nor does it slow down your service.

The second big caveat to keep in mind with the cheaper prepaid offering is that you'll have to pay full price for your new smartphone. While this may hurt your wallet upfront, the fact is that over time, you'll actually pay less over a two year period for the service and full-price than you would if you took the subsidy and paid an extra $55 a month. In fact, if you bought an iPhone 4S, you'd end up saving about $870 over two years on Virgin Mobile compared to Sprint.

Virgin Mobile isn't the only prepaid offer available, of course. But since you are already a Sprint customer, it is the most obvious choice for you since you know you'll get good coverage with your device. While price is important when evaluating whether to get a prepaid smartphone or subscribe to a post paid service, the reality is that not all low-cost, prepaid services offer the network coverage that you need.

But if you are interested in exploring your options you may want to consider Leap Wireless and MetroPCS, which also offer all-you-can-eat data, voice, and text messaging prepaid plans for extremely low prices.

If these networks aren't available where you live and work, you might also want to consider T-Mobile USA. It offers traditional post-paid services, which are lower than its other nationwide competitors. And it also offers prepaid services.

And if it's hard for you to come up with the cash for a prepaid device, T-Mobile offers these value plans that lets you pay for your phone in 20 monthly installments. On the 21st month when your device is paid for, the cost of your plan is reduced. This differs from other post plans on Sprint, AT&T and Verizon that do not lower your monthly cost, even after you've paid off the subsidy for the device.

So the bottom line is this: Ditch Sprint's postpaid service and sign-up for a prepaid plan. You will save money over the long haul. Good luck!

Keeping Verizon's unlimited data plan

Dear Maggie,
I have the $30 unlimited data plan with Verizon, and instead of upgrading to a new phone at full price, can I buy one from Gazelle or eBay and use it with my $30 unlimited plan. Would this include 4G LTE phone and plan?

Thanks,
Confused in Louisville

Dear Confused in Louisville,
The short answer to your question is "yes."

As you know, Verizon has changed its pricing policy. After June 28 anyone who had an unlimited data plan will have to give up that plan if he or she buys a new Verizon smartphone for a subsidized price.

Verizon booth at CES 2012
Roger Cheng/CNET

In order for you to keep your unlimited data plan on Verizon after June 28 should you renew your contract, you can either buy a new phone at full retail price or you can bring a device you already own to the network. So if you buy a used Verizon smartphone on Gazelle or eBay that would work. The only way you will lose the unlimited data plan is if you sign up for a new phone from Verizon and the price of the device is subsidized.

Also, just to clarify here, it doesn't matter if the new phone you buy or the phone you get from Gazelle or eBay is a 3G device or a 4G device. So long as Verizon didn't subsidize the cost of the device, you're able to keep the unlimited data plan for as long you like.

I hope this clears up the confusion for you. Good luck!

Ask Maggie is an advice column that answers readers' wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie's advice. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.

 

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