Prepaid vs. Postpaid Phone Plans

You won’t get too far into shopping for a phone plan before you confront the choice between prepaid vs. postpaid plans. Deciding which type is right for you will help focus your search for the best plan for you.  

Here’s a quick look at the key differences between prepaid and postpaid phone plans, before we dive deeper: 

Prepaid vs. postpaid cell phone plans: What’s the difference?  

With prepaid phone plans, you pay first and then use the service. Because you’re paying ahead, there’s no credit check. You also don’t have to sign a contract, so you have the flexibility to switch to something else at any time.  

Postpaid plans, on the other hand, let you pay at the end of a month of service, but you must undergo a credit check and sign a contract. That makes it harder to switch plans or carriers.  

Here's an in-depth look at each type of plan:

What are prepaid phone plans and how do they work? 

A prepaid phone plan is one where you pay up front for a period of service, typically a month. You get a set amount of talk, text and data during that time. If you use it up, you can pay to add more, start a new billing cycle, or switch to another plan or even another carrier. Because you’re paying ahead, you won’t have to undergo a credit check.  

Prepaid plans are offered widely, not only by the Big 3 wireless carriers (AT&T, T-Mobile, and Verizon) but also by the service resellers who pay to use the Big 3’s cellular networks. Those are called mobile virtual network operators (MVNOs), and they can offer lower prices because they don’t have to maintain their own infrastructure. The tradeoff is you might not get many or any perks, like free streaming subscriptions, and your data might be prioritized behind other plans, risking slower performance at times.  

Types of prepaid phone plans 

Unlimited data plans: You prepay for a set period of unlimited talk, text, and data. But unlimited plans are usually not truly unlimited — you typically get a set amount of high-speed data, after which your data speeds are slowed until the next billing period. An example: With the Visible+ plan, you get 50GB of premium data then may see slower speeds until your billing cycle resets. 

Capped plans: You purchase a set bundle of talk, text, and data (if you want it) for a defined period — usually 30 days, although some providers, like Mint Mobile, only sell service in 3-, 6-, and 12-month bundles. If you run out before the paid period ends, you can buy more or “top up” while keeping the same renewal date. For example, say you use Tello’s Build Your Own Plan option. If you need more before the service period ends, you buy 1GB, 3GB, or 5GB more data (which expires when the billing cycle ends) or buy credits that cover calls, texts, and data (credits expire after 90 days). 

Pay-as-you-go plans: You buy a set amount of talk, text, and mobile data if you want it, and use it till it runs out. You’re not tied to a specific billing cycle. When your credits run out, you have to buy more to continue. 

No-data plans (talk & text only): The name says it all: You get calling and texting but no data or a very minimal amount to fuel simple actions.  

Within these categories of plans, there are varieties aimed at different types of customers, such as:  

• Cheap phone plans 
• Family plans 
• Plans for kids and teens 
• Phone plans for seniors 
• Unlimited data plans for two lines 
• Business phone plans 

Pros of prepaid phone plans  

Prepaid plans have a lot to recommend them:  

• More affordable: Prepaid plans tend to cost less than postpaid (contract) plans, especially if you go with an MVNO. They can help you stick to a budget and save money for other things. 
• No surprise bills: Because you prepay for a set amount of service, you don’t have to worry about extra charges or a surprise on your bill. 
• No credit check: That's helpful for people with damaged credit or those just starting out, maybe getting their own phone plan for the first time, who haven’t built a credit history. And it also means there’s no danger that an unpaid phone bill might affect your credit. 
• No long-term commitment: When your billing cycle ends, you can switch plans or go to a different provider. Since you’re not locked into a long-term contract, it’s easy to adapt when your needs change.  
• Many choices: There’s way more prepaid plans out there than postpaid, so you can shop around for something that’s just right. 

Cons of prepaid phone plans  

There are some tradeoffs to be aware of with prepaid plans:  

• Lower network priority: During times of heavy network usage, customers on some plans get higher priority while others are deprioritized and may see slower speeds. It generally goes in this order: people on postpaid plans get top priority, followed by prepaid plans from the Big 3, followed by prepaid plans from MVNOs. However, there are some exceptions. For example, Visible+ and Visible+ Pro prepaid plans promise “no data slowdowns due to prioritization.”  

• Lower high-speed data allowances: As noted above, “unlimited” plans may not really be unlimited. Unless a plan promises “truly unlimited data” or “data that never slows down,” there will be a cap on how much premium data you get per billing period. After that, your data speeds may be slower until the next cycle. And these premium data allowances tend to be lower on prepaid vs. postpaid plans. 

• Fewer or no perks: Don’t expect the extras you see on more expensive postpaid plans, such as free subscriptions or smartwatch plans.  

• Few or no phone financing options: You will have to bring your own phone or purchase one outright — but that can save you money in the long run (check the numbers with this free phone bill calculator). A few carriers have “step-up” plans that unlock $0 down 0 APR phone financing offers after you pay your phone plan on time a certain number of months. But they require you to switch to a postpaid plan when you finance the phone. 

Who are prepaid phone plans best for? 

Prepaid phone plans are great for people who want to stick with a budget, want to avoid surprise extra charges, and want the flexibility to switch plans if their needs change. They also help those new to credit or with damaged credit to get a phone plan.  

They’re also a good way to get temporary phone service when traveling abroad, by getting a SIM card for international travel.  

Because they tend to have lower premium data limits, people who want a lot of high-speed, prioritized data or who can’t often be on Wi-Fi should shop carefully. There are some prepaid plans with high allowances for premium data and mobile hotspot, but you might prefer a postpaid plan.  

Best prepaid phone plans  

The best prepaid phone plan for you will depend on your priorities. Here are a few highlights:  

If you want rock-bottom prices, you can’t go wrong with TextNow’s $0 Free Flex plan. It gives you unlimited talk & text, plus 1GB free data for essential apps and the ability to buy more data if you want it.  

For premium data with no cap, US Mobile’s Unlimited Premium on its Dark Star (AT&T) network will give you unlimited premium data with no slowdowns for $44 ($35 with current offer). 

Many prepaid plans come from service resellers called MVNOs (think Visible or Mint). But don’t overlook prepaid plans from the Big 3 carriers. AT&T, T-Mobile, and Verizon may be better known for postpaid service, but they also offer prepaid no-contract plans at prices that can be competitive:  

• AT&T: You can get unlimited data and 10GB of hotspot data for as little as $20 a month if you prepay for a year. Other options include a 5GB plan at $30 or 15GB for $40. If you want unlimited data and some perks, check out the $55 plan with 50GB premium data before slowing or the $65 plan with unlimited premium data (those prices are with AutoPay discount).  
• T-Mobile: Choose from three levels of unlimited data service: $40 gets you 15GB premium data before slowing and some perks, $45 gets 50GB premium and more perks, while $60 gives you 50GB premium data and the largest list of perks (prices are with AutoPay discount, and offer a 5-year price guarantee). It also offers promo plans for four lines (good for families) and two lines with unlimited data.  
• Verizon: You can go simple with a $35 talk & text only plan, or for the same $35 get 15GB data. Unlimited plans run $50 (subject to slowing) or $60 (50GB before slowing). Prices are with AutoPay discount and carry a 3-year price guarantee.   

What are postpaid plans and how do they work? 

A postpaid plan lets you pay for service at the end of your service period, but you have to enter a contract. Because the carrier is essentially extending you credit, you’ll face a credit check. Unfortunately, although a postpaid plan is a credit account, paying your phone bill typically doesn’t help your credit unless you take specific actions — but it can damage your credit if you pay more than 30 days late. 

These plans are mostly offered by the Big 3 networks and cost more than prepaid — but they’re also likely to offer perks like free subscriptions, smartwatch coverage, and free cloud storage.  

Types of postpaid phone plans 

Unlimited data plans: You can talk, text, and use all the data you want — but as noted above, most plans are not truly unlimited. You will have a cap on how much premium, high-speed data you get before data speeds can be slowed the rest of the billing period. But postpaid plans tend to offer higher premium data amounts than prepaid plans do. 

Limited data plans: These allow a set amount of data use during the billing period. For example, AT&T has a 4GB postpaid plan for $50 after AutoPay discount. If you need more data before the next billing cycle, it’s $10 per 2GB. However, for only a buck more per month you can get the $50.99 Value Plus VL plan with unlimited data (though data speeds may be slowed when the network is busy). 

Just like with prepaid plans, you’ll find postpaid plans that target various types of consumers:  

• Family plans 
• Plans for kids and teens 
• Phone plans for seniors 
• Talk & text only (no data) plans 
• Unlimited data plans for two lines 
• Business plans 

Pros of postpaid phone plans  

• Higher data allowances: Postpaid plans tend to be the richest in allowances, with unlimited talk & text and high premium data allowances.  
• Higher data priority: These plans get the highest prioritization on cellular networks, so you’re less likely to experience slowing during congestion.  
• Perks: These plans often sweeten the deal with extras like free subscriptions, free cloud storage, smartwatch or tablet data add-ons, etc.  
• Phone financing offers: Postpaid carriers often offer phone deals and discounts, or scheduled phone upgrades. (But note that upgrading to a new phone may extend the length of your contract.) 

Cons of postpaid phone plans 

• Higher prices: These tend not to be as budget friendly as prepaid plans.  
• Credit check: Because you get services before you pay for them, the carrier will check your credit. That can be a barrier for those still building credit or who have damaged credit.  
• Less flexibility: You have to sign a contract, usually running 24 to 36 months, so you don’t have a lot of options to switch plans (unless you’re going to a higher-cost plan with the same carrier) or switch carriers (unless you want to pay an early termination fee).  

Who are postpaid phone plans best for? 

People who need a lot of data might prefer a postpaid plan because they tend to offer the highest allowances of premium data. They also tend to be richer in streaming subscriptions and other perks heavy data users might appreciate.  

Postpaid plans also offer phone financing and upgrade perks, which can be attractive to those who want access to the latest phone models. And they’re more likely to have multi-line discounts for family plans.  

Best postpaid phone plans 

Shoppers going for a postpaid plan will have fewer to sort through, as these mainly come from the Big 3 carriers. It’s more about the data speeds and perks you want, and you can still find some cheap phone plan choices. Here’s a quick comparison (all prices are with AutoPay discount):  

• AT&T: You can choose unlimited data for $50.99 or $65.99 (data may be slowed when the network’s busy) or pay $75.99 for 75GB of premium data or $85.99 for unlimited premium. There’s also a $50 plan with 4GB of data. Perks are limited, though, mostly a mobile hotspot data allowance on the higher-priced plans.  
• T-Mobile: Four plans offer unlimited data, for $50 or $60 with 50GB data before slowing, or $85 or $100 for unlimited premium data, extra perks, and a 5-year price guarantee. You may be able to pay a bit less with T-Mobile's discounts for seniors, military and veterans, and first responders.  
• Verizon: Choose unlimited plans for $65, $80, or $90 monthly. All come with a 3-year price guarantee. At the lowest price, your data may be slowed when the network’s busy. Paying more gets you extras like access to Verizon’s fastest network, 5G UW, plus perks like streaming subscriptions and watch or tablet data. 

How to choose between a prepaid vs. postpaid phone plan 

You know your needs best. But — generally speaking — prepaid is a better choice if you’re most focused on cost and the flexibility to adjust how much you spend month to month. But if your top concern is premium data and perks, and you don’t mind locking into a contract, postpaid may be better for you.  

Consider these things when selecting a phone plan:  

• What is your budget? 
• Are you willing to undergo a credit check and sign a contract, or would you prefer to avoid that? 
• How much data do you need? What data speeds do you need? 
• What network has the best coverage for your area? 
• Do you want phone financing or a phone deal? 

Which plan is cheaper / better for budgeting? 

 Prepaid plans are the winner on both: They tend to be priced lower and they're better for budgeting, because no contract means you can switch to something more affordable at any time.  

Are there data speed and performance differences between prepaid and postpaid? 

 Yes, you’ll find that prepaid plans have some tradeoffs that come with their lower prices. Prepaid plans from MVNOs generally get the lowest priority on the cellular network, so you have a greater chance of slower speeds during times of network congestion. But that tends to be short-lived and typically happens in crowded areas. 

Prepaid plans also tend to have lower caps on how much premium data you get than either postpaid plans or prepaid plans from the Big 3 carriers. But as always, there are variations. For example, Visible+ Pro offers unlimited premium data for $45 a month, or sometimes less during limited-time offers. Meanwhile, you’d pay $75.99 for AT&T’s Unlimited Extra EL and get only 75GB premium data. 

And on all unlimited plans, prepaid or postpaid, there will be a fair-use rule concerning high data usage. But these tend to affect only a small percentage of users. For example, Verizon bases its fair-use policy limit on the top 0.5% of data users.   

Are there hidden costs for both prepaid and postpaid plans? 

 There can be extra costs beyond the price you see in big type on the website, whether prepaid or postpaid. Here’s what to look for before choosing a carrier and plan:  

• Taxes, fees & surcharges: Look for wording on the site that indicates either “taxes & fees included” or “taxes & fees extra.” Check the broadband fact sheet, which the FCC requires, which will list monthly fees plus things like line activation or device connection charges. 
• Early termination fees: Postpaid plans involved a contract, and if you want to end it early there may be a fee to pay. Again, look at the broadband fact sheet to know before you commit.  
• Data roaming and international use: Some plans provide talk, text, and sometimes data in other countries while others require you to purchase an add-on. If you plan to use your phone outside its home network or in another country, investigate what’s covered and what you’d pay extra for. 
• Device financing: Postpaid plans offer phone deals where you pay over time, and that means an extra charge on your bill until the phone’s paid off. Even prepaid plans may offer device financing through a third party, like Afterpay, which means an additional payment.  

What about international service, roaming, family plans, etc.? 

Both prepaid and postpaid plans may include international service, data roaming, family plans, and more. It just depends on the particular carrier and the specific plan.  

This is where it pays to dive deeper into a carrier’s website. Use the main description of the plan to narrow down your choices but then pay attention to fine print — look for:  

• Footnotes at the bottom of the webpage that explain data and hotspot allowances, talk, text and data use to or in other countries, etc.  
• Links to “see full plan details” or a link to the terms & conditions. 
• The broadband fact sheet. 
• Links at the top of the webpage to explainers of international coverage or a search bar where you can type in key terms.  

When looking for family plans, keep in mind a carrier may instead call them “multiline plans” or simply ask you to choose the number of lines you need to see the price.  

What about flexibility and switching plans or carriers? 

For maximum flexibility, go with a prepaid plan — whether it’s from a Big 3 carrier or an MVNO. With prepaid plans, there’s no ongoing contract, so you can switch plans or carriers whenever you want.  

Postpaid plans, however, do have a contract that typically runs 24 or 36 months. If you want to change before then, you’re limited. You may be able to switch to a different plan from the same carrier (usually trading up to a higher-cost one). But to go elsewhere, you’ll likely face an early termination fee and have to pay off any balance remaining on a financed phone.  

How to select a prepaid phone plan 

You’ll find plenty of guidance and comparisons online, whether you’re looking for a cheap phone plan, one with unlimited data, or any other flavor of plan like those for seniors or kids and teens.  

Create a list of the ones that appeal to you, then dig further into the details:  

• Read the fine print on provider websites to understand details of each plan, such as how much premium data you get, what data speeds are slowed to after that amount, and whether your data will be deprioritized behind other plans.  
• Look at the broadband fact sheet for each plan. The FCC requires these disclosures, which look like a nutrition label on a food package and tell you things like typical data speeds, prices, taxes & fees, and more. 
• Take a look at user reviews, too, to hear what people have to say about their experience with different plans.  
• Check out the FCC coverage map to make sure you’re not choosing something with spotty service in your area. 

How to select a postpaid phone plan 

You’ll find fewer postpaid plans, mainly from the Big 3 (AT&T, T-Mobile, Verizon). Identifying which carrier has the best coverage in your area can help you narrow the choices down. Then, get into details:  

• Read all the fine print to make sure you know what you’ll get, for example the amount of premium data, data speeds after you’ve used that, any discounts you may get such as AutoPay. 
• Because postpaid plans are a form of contract, make sure you understand the terms such as whether you’d pay an early termination fee if you exit early. 
• Check out user reviews online to get an idea of existing customers’ experiences with the carrier.