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August 16, 2021

Do prepaid smartphone plans make any sense?

The number of smart-phone users electing to skip those locked-in contracts and instead go with a prepaid plan is on the rise, according to data from the research firm NPD Group.

In the United States at least, sales of subsidized handsets combined with a locked-in contract from big providers like Verizon have been fairly flat.

That makes prepaid phone plans a better deal for many people, who may be able to save hundreds of dollars rather than sign up for a mid-term contract plan, according to the New York Times.

The biggest drawback of going prepaid will be that you'll probably end up paying substantially more for your phone than if you had obtained it with a three-year contract. Overall though, you may still be better off. 

Instead of 'Let's look for the free phone' (which is never free) that means switching to 'Let's think about the total cost of ownership.'

“Right now, consumers don’t do the math, and they have a lot of resistance to paying $500 to $600 upfront, and they’d rather pay $100 upfront and then overspend,” says Tero Kuittinen, an analyst with Alekstra, a company that helps customers manage their cellphone bills. “That psychology has worked for hundreds of years, and it’s still working." 

But, as usual, the options on this side of the border aren't as varied. While Telus and other major brands do offer prepaid plans, they like to see customers on contract plans and are generally slow to offer in-demand handsets this way.

But if you already have a phone then matchmaking sites like MyCellMyterms might give you a few choices.

Have you've gone prepaid recently? Did you have a phone to begin with? Are the $$ still making sense?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...