Can a Prepaid Phone Plan Save You Money?

Prepaid phone plans can save consumers 30% to 50% on monthly phone bills. The plans offer decent coverage and phone selection without hidden fees.

Prepaid plans aren’t just for people with bad credit anymore. While the national average monthly bill for a traditional smartphone plan is $93, prepaid plans can be had for $30 to $50 a month. There are no activation fees or credit checks, and in many cases prepaid plans come with good national coverage. While some plans offer a limited selection of phones, other prepaid plans come with a full list of the newest phones and some prepaid carriers even let customers bring their old phones along.

Both small carriers and the top national carriers now offer prepaid phone plans.

prepaid phone plans from straighttalk

Prepaid phone plans from StraightTalk. Click to enlarge.

Prepaid Phone Plans: They’re Not Just for Bad Credit Anymore

Prepaid phone plans started out as something of a dirty word. The plans were generally seen as a way for people with bad credit to get mobile phones. They also used to have spotty service and a reduced selection of available devices. That’s not always true anymore.

The smartphone carrier market is changing. Small carriers have stepped things up, renting space on big networks and offering some juicy prepaid plans. Larger carriers saw a danger to their bottom line and joined the game with their own complement of prepaid phone plans. Those facts plus the lack of credit checks are making prepaid phone plans a popular choice.

prepaid phone plans verizon

Screenshot of Verizon’s prepaid phone plan page.

Nowadays, prepaid phone plans are a real alternative to contract-based plans. Instead of being locked into a phone and a carrier for two years with a contract, consumers can buy their own phones and pay for only what they use in advance. From 2012 to 2013, prepaid phone sales went from 20% to 30% of the market. Today, some estimates place prepaid and postpaid phone sales at about a 50/50 split.

Contract phone plans do reduce initial phone prices. The iPhone 6 16GB model costs $199 with a two year contract, or $649 unlocked and ready for a prepaid phone plan. However the $400 difference can be paid off in less than a year with a prepaid plan. Consumers who want a prepaid plan but still like the idea of paying monthly for a phone can buy phones under installment plans.

Regular Phone Plans

To compare apples to apples, lets take a look at traditional smartphone plan prices first.

The top four smartphone carriers in the U.S. are Verizon, AT&T, Sprint and T-Mobile, taking up a combined total of 93% of the market. Here’s the advertised price of comparable plans with each carrier:

Traditional Smartphone Plan Costs

CarrierPlan NameDataMonthly Cost
VerizonMore Everything2GB$100
AT&TShare Value1GB$105
T-MobileSimple Choice3GB$80
The above table shows the advertised cost for comparable smartphone plans with each of the four major U.S. carriers. We added in estimated taxes and fees per the fine print on their offers. We chose the most comparable available plans.


According to a survey by Nielsen, the average monthly smartphone bill in the U.S. is $93. So how do those prices compare to prepaid plans?

Prepaid Phone Plans vs Contract Phone Plans

prepaid phone plans cricket wireless

Screen grab from prepaid phone plan company Cricket Wireless, bought in 2014 by AT&T.

The table below shows four popular prepaid carriers. Their plans vary between $30 and $50 per month. While that’s a substantial savings over traditional monthly contract phone plans, the limiting factor seems to be the selection of phones offered.

Metro PCS and Virgin Mobile have a fairly limited selection of lower-tier phones. Boost Wireless has a good selection of most of the newer popular phones like the iPhone 6 and the Samsung Galaxy S5, but offers a shorter list of older phones allowed on the network. That can make it a challenge for anyone hoping to bring their old phone to Boost, though they do offer trade-ins.

Cricket Wireless, now owned by AT&T, and StraightTalk both allow customers to bring most phones to their networks. Cricket has a compatibility checker online here. Users dial *#06# on their existing phone to see their phone’s 15-digit IMEI number, then enter it into the compatibility checker. The checker then tells them if their phone will work on the Cricket network.

Prepaid Phone Plans Compared

CarrierPlan NameDataPhonesMonthly Cost
Virgin MobileUnlimited Your WayUnlimited, 2.5GB high speedLimited Selection$35
Cricket WirelessBasic with 1GB add on2.5GB, 1GB high speedMost$50
Boost WirelessBasicUnlimited, 1GB high speedMost New Phones, Limited Older Models Accepted$35
Metro PCSBasic1GBLimited Selection$30
Straight TalkUnlimitedUnlimited, 3GB high speedMost$45
Comparison of prepaid smartphone plans from four top carriers. Monthly cost includes all taxes and fees other than state sales tax.


We’ve only listed individual plan prices for comparison. Between the four carriers listed above, plus other carriers like Ting, Consumer Cellular and TracFone, any consumer should be able to save 30% or more with a prepaid plan, using any phone they like.

Comparing apples to apples, an iPhone 6 with the StraightTalk phone plan listed above costs $649. With two years of prepaid phone service, the plan costs $45 x 24 months or $1,080. Adding in the price of the iPhone gives a total of $1,729. The same phone with Verizon costs only $199, but with $2,400 in monthly payments, the total bill for two years comes to $2,599. That’s a 33% savings with a prepaid phone plan. Someone who already owned their phone could save an even higher percentage.

While the prepaid phone market started with smaller companies, the big existing carriers quickly saw the value in offering prepaid plans. Below is a breakdown of prepaid phone plans from the four major U.S. wireless carriers.

Prepaid Phone Plans From Major Carriers

CarrierPlan NameDataPhone SelectionMonthly Cost
SprintPrepaid3GB Limited to 3G SpeedLimited$45
Prepaid phone plans from the four major U.S. carriers compared.


Note that while prepaid plans from the big carriers are less expensive than their monthly plans, in all cases the available devices are limited to older and lower-tiered phones.

Prepaid Phone Plans for People Stuck in Contracts

People stuck in contracts may want to save 30% to 50% on a prepaid phone plan, but breaking a contract with an existing carrier can eat up most of the savings.

Some companies like Sprint and T-Mobile offer to buy out existing contracts for customers who come over from other providers. Sprint also cuts the monthly rate in half for those who defect from Verizon or AT&T.

prepaid phone plans sprint buys out contracts

This screen grab show’s Sprint’s offer to buy out the contracts of customers who defect from other networks.

Pitfalls of Prepaid Phone Plans

prepaid phone plan pitfalls coverage map straighttalk

StraightTalk’s prepaid phone plan coverage map.

The biggest pitfall with prepaid phone plans is coverage. While coverage is generally good, users will definitely want to check coverage maps before switching carriers. Contract cutters should be warned that even phone plans with excellent coverage maps may not have excellent 4G coverage.

prepaid phone plan virgin coverage map

Virgin’s prepaid phone plan coverage map.

Another pitfall is data draining activity like video streaming, music streaming, video calls and online games. Cricket Wireless doesn’t apply overage charges. Instead, they cap monthly data usage, stopping users from accessing the internet once their limits have been reached. Other companies like Boost and Virgin Mobile also don’t charge for overages. Instead they throttle down to slow internet speeds once users reach their monthly limits. Using Wi-Fi as much as possible can help users avoid data caps and throttling issues.