On a prepaid phone plan, you pay for your service upfront, and with a postpaid plan, you pay your bill at the end of the month. As such, the main difference between a prepaid and postpaid plan is when you pay for it, but there are a few other differences as well. Both plan types have their advantages and disadvantages, and the right one for you largely depends on your wireless preferences.

Most prepaid plans are less expensive than traditional postpaid plans, and they allow you to forgo a credit check. Conversely, postpaid plans, although a bit pricier, require a credit check and often include more perks, such as entertainment or travel features.

In this article:

What are Prepaid Plans?

When you sign up for a prepaid plan, whether through an MVNO or major carrier, you pay in advance each month for your service. If you run out of talk, text, or data before the end of the month, then you’ll have to wait until the next billing cycle. With some prepaid carriers, you can top off your talk, text, or data once you’ve run out; otherwise, you can easily switch plans to accommodate your needs.

Because you pay for your service upfront, you also have the freedom to stop or pause your prepaid plan at any time. That said, it is a common misconception that it is easy to switch carriers when you’re on a prepaid plan—if you bought your phone on monthly installments through your prepaid carrier, you may be required to remain with that carrier for a set period time.

In some cases, this may be true even if you purchased your phone outright as prepaid carriers may lock your phone to their network for a specified period of time, which means you can’t use your phone with another carrier. If you bring your own phone (BYOP) to the prepaid carrier, this won’t affect you.

Let’s Talk Tip: Don’t let the term “no-contract” fool you—buying a phone on monthly installments through a prepaid carrier may still lock you into service for a set period of time.

Prepaid plans are often referred to as no-contract plans (since postpaid plans have traditionally included contracts in the past), but with the entire wireless market getting rid of contracts, the main distinction between prepaid and postpaid is when you pay for your plan.

MVNO Prepaid Plans

Major Carrier Prepaid Plans

Pros of Choosing a Prepaid Plan

Going with a prepaid plan can save you hundreds of dollars per year, especially if you’re currently on a postpaid plan with one of the Big Four—a group comprised of Verizon, AT&T, T-Mobile, and Sprint. There are many advantages to choosing a prepaid phone plan, including:

  • No credit check: Even if you have poor credit or no credit history, you can still get a prepaid plan.
  • Customization: Many prepaid carriers offer the ability to build your own plan.
  • Flexibility: You can stop or pause your plan at any time.
  • Better parental controls: Parents can buy a budget phone for their child or teenager and limit the minutes, texts, and data they can use.
  • No overage fees: Since you pay for your service upfront, it’s not possible to go over your talk, text, or data allowance. If you run out, you have to wait until the next billing cycle, or in some cases, you can add on additional minutes, messages, or data.
  • Family plan options: Many prepaid carriers offer multi-line plans, which could save you even more money in the long run.

Cons of Picking a Prepaid Plan

As with anything else, there are a few disadvantages to going with a prepaid plan vs. a postpaid plan. These may include:

  • Fewer perks: Prepaid plans tend to include fewer perks, such as entertainment features or international roaming.
  • Device interest: Many MVNOs partner with a third-party financing company that charges up to 30% interest on phones.
  • Data deprioritization: Some prepaid carriers deprioritize your data in favor of customers on the parent network.
  • Phone selection: Some small carriers have a very limited phone selection, carrying just a few older or refurbished models.

What are Postpaid Plans?

Postpaid plans require that you pay for your service at the end of the month, reflecting your data usage. Verizon, AT&T, T-Mobile, and Sprint offer postpaid plans, as do select MVNOs, such as Reach Mobile and Credo Mobile, which operate on Verizon’s network. While the Big Four offer shared data plans, their unlimited plans are the stars of the show—the unlimited plans often include travel benefits, entertainment perks, and a boatload of premium data.

Postpaid unlimited plans often include travel benefits, entertainment perks, & a boatload of premium data.

Although postpaid plans no longer lock you into a service contract, buying a smartphone on a monthly installment plan can somewhat resemble a contract, since the carrier locks your phone to its specific network until you’ve paid it off entirely. Even Verizon, which automatically unlocks your phone after 60 days, still requires that you pay your device off in full before switching carriers. If you’re trying to keep your costs down, it’s probably not in your best interest to switch postpaid carriers after only a few months of service. As with prepaid plans, this doesn’t apply to you if you bring your own device to a carrier.

Postpaid Plan Options

Pros of Choosing a Postpaid Plan

Postpaid carriers make the most sense for folks who consume large amounts of data each month, since their unlimited plans often feature high data deprioritization thresholds—and a myriad of perks to go along them. Activities that use a lot of data include video and music streaming, gaming, and social media. The pros of choosing an unlimited postpaid plan include:

  • Unlimited data: Although no plan is truly unlimited, these plans often include a nice amount of premium data.
  • No overage fees: Once you reach your premium data, your data speeds are temporarily slowed until the next billing cycle (although you will be charged for going over on limited data plans).
  • Travel perks: Each of the Big Four carriers includes travel benefits, such as Mexico and Canada roaming, global text, and international data, with their unlimited plans.
  • Entertainment: The Big Four’s unlimited plans include free entertainment features, such as Hulu, HBO, Netflix, and Amazon Prime.
  • Family plan options: You can save money on otherwise expensive unlimited plans by adding multiple lines.

Cons of Signing Up for a Postpaid Plan

For all their bells and whistles, postpaid plans still come with a few drawbacks, such as:

  • Cost: Postpaid plans, particularly unlimited plans, tend to cost more than prepaid plans.
  • Credit check: Postpaid plans require a credit check to get started, which can be off-putting for those with poor credit or no credit history.
  • Unused data: The majority of wireless customers don’t need unlimited data and may be better suited for a limited data plan.
  • Limited plan selection: Most carriers’ postpaid catalogs include unlimited plans and a few select shared data plans.

Let’s Talk Take: Which is Better for You?

There is no clear winner between prepaid and postpaid plans, but there’s a chance one of them is a better choice for you and/or your family. Before choosing a prepaid or postpaid route, you’ll want to consider your priorities.

Who are Prepaid Plans Best for?

Although a prepaid plan is an excellent choice for any cell phone customer, there are specific target audiences who may benefit the most from prepaid service. A few reasons someone may choose a prepaid plan include:

  • They prefer plans that do not require credit checks.
  • They own an unlocked smartphone.
  • They want an affordable phone plan.
  • They want a wide variety of phone plan options.
  • They primarily need their phone for talk and text.
  • They have consistent and reliable WiFi access.
  • They want a hassle-free way to control their child’s phone usage.
  • They want the flexibility of building their own plan.

This is certainly not an exhaustive list—there may be many other reasons why someone ultimately chooses a prepaid plan, whether with an MVNO or major carrier.

Who are Postpaid Plans Best for?

With unlimited postpaid plans being all the rage in recent years, many people are quick to sign up for an unlimited plan without considering whether they need it or not. Some reasons someone may go with a postpaid unlimited plan include:

  • They have solid credit.
  • They consistently use at least 20GB of data/month.
  • They are willing to pay more for a plan with all the bells and whistles.
  • They want to buy a new smartphone on monthly installments (many prepaid carriers charge interest on device payment plans while the Big Four do not).
  • They want network priority and fast data speeds (MVNO data speeds are sometimes deprioritized in favor of customers on the main network).
  • They frequently travel, especially to Mexico or Canada.

Again, there are plenty of other reasons why someone may choose a postpaid plan, and at the end of the day, the choice is up to you.

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