Which is better value: Postpaid or Prepaid?

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The telcos offer a range of mobile phone plans to suit the needs of different customers, but all these options can lead to confusion. To help make sense of the situation, we’ve broken down two of the biggest buzz words in the mobile phone world – prepaid and postpaid. How do they differ, and where can you find the best value?

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What is a prepaid phone plan?

A prepaid mobile phone plan is one with which you pay the provider a certain amount of money upfront, which is then converted into mobile credit for you to use as you please, on either calls, texts or mobile data, or a combination of them. Some prepaid plans come with a set amount of call time and messages, while others come with pay as you go (PAYG) rates, whereby you are simply charged specific amounts for what you use. Prepaid plans with unlimited talk and text are now very common, leaving data as the main point of difference. Prepaid plans mainly appeal to users who just prefer to pay for their service upfront and not run the risk of incurring any extra charges.

Prepaid phone plans do not come with a new handset, so if you’re keen on the latest smartphone, you will need to buy it outright and then subscribe to your preferred SIM only deal.

What’s good about prepaid plans?

Prepaid plans provide the ultimate flexibility. There is no contract and no risk of shock bills at the end of the month. Once you’ve used up all your credit, you can simply buy more, usually called a ‘recharge’. Speaking of which, a huge bonus of prepaid plans is that, if you won’t be using your phone for a while – say, when you’re on an overseas trip – there’s no obligation to recharge and spend money on credit you won’t be using. Prepaid is simply a case of paying for what you use, and your account will be waiting for you to go again once you get home.

What’s bad about prepaid plans?

The downside to prepaid plans is that you are restricted to a set amount of credit, and if you run out you will need to recharge again, which can prove quite costly. You could be left in a position where you have to go a period of time unable to make calls, send messages, or go online! This isn’t ideal for young mobile users or children who might need to call mum or dad.

Prepaid credit also expires after a certain period of time, typically 28 or 30 days, but this can vary between plans. Some cheap prepaid plans can be as short as a single day whereas other long-expiry plans can last for an entire year (365 days). The other drawback to prepaid plans is that you often miss out on additional bonus features offered by the providers. They tend to reserve their best deals, including things like music or video streaming, for postpaid customers.

Prepaid summary

  • SIM only – bring your own phone handset
  • Buy credit upfront which you spend on calls, texts and mobile data
  • Only pay for what you actually use
  • Run the risk of having no credit to call in emergencies
  • Leave your service provider whenever you want

Prepaid Mobile Satisfaction Ratings

What is a postpaid plan?

A postpaid mobile phone plan is one with which you pay a fixed amount at the end of each month, in exchange for a set amount of calls, texts and data to use during the billing period. The idea behind retrospective billing is that it allows users to exceed their plan’s limitations, if they need to, and pay for it later.

Postpaid plans are available over three lengths – an auto-renewing month to month basis, 12 months or 24 months. Monthly and 12 month postpaid plans will be SIM only, with those over 24 months usually including a new handset.

What’s good about postpaid plans?

The big selling point of postpaid plans is that they provide the safety net of being able to call, text, or go online whenever you want. You’ll never be stuck by the side of the road because you have no prepaid credit to call a friend for a lift! Postpaid plans also provide the convenience of auto-renewing every time, meaning there is no manual recharging required. Postpaid plans also have a reputation for offering better value than prepaid deals as reward for sticking with your provider every single month and not taking a break.

The benefit of 24 month postpaid plans is that you can bundle a new handset into the deal. If you can’t afford to buy the latest iPhone outright, for example, you can simply pay it off monthly in addition to your plan features.

What’s bad about postpaid plans?

The major downside to postpaid plans is that you run the risk of incurring extra charges for exceeding your plan’s limitations. Excess data charges in particular can be costly, usually about $10 per GB, but this varies between providers. Postpaid plans also require a little more effort to cancel. Unlike prepaid where you can simply not recharge again, postpaid plans need to be cancelled through your provider, otherwise they will keep billing you. Having a postpaid plan over 12 or 24 months means you lose the flexibility of being able to switch at a moment’s notice when you spot a better deal elsewhere.

Postpaid summary

  • Receive a fixed amount of calls, texts and data for a set price every month
  • Short or long-term contracts available – monthly, 12 and 24 months
  • Convenience of auto-renewing plan features every month
  • Risk of being charged extra if you exceed your plan’s limitations
  • Can include your choice of a large range of phone handsets at an extra cost

Postpaid Mobile Satisfaction Ratings

Which one should you choose?

The mobile service you should choose depends on how you use your phone, or just your personal preference for one type of the other. If you’re a fairly light user who doesn’t require unlimited talk and text, a cheap prepaid plan with a long expiry period could be the way to go. However, there are also some very cheap postpaid plans which can provide the back-up of unlimited calls just in case you ever need them.

Do you want to pay for your phone service upfront and run the risk of having no credit when you run out? Or would you prefer to have an endless supply of calls, messages and data, but run the risk of being charged extra? Maybe your decision will be completely swayed by whichever type of plan offers the biggest bang for your buck.

Which is better value?

There has traditionally been a perception that postpaid plans offer superior value to their prepaid cousins, but is this really the case? To find out, Canstar Blue has compared costs from a wide range of postpaid and prepaid plans to work out which type, on average, provides the best value. We have compared plans with unlimited talk and text, with data the point of difference. So, which type of plan provides the best data versus price result?

Cost per calendar month ($) Prepaid plans average data (GB) Postpaid no contract plans average data (GB) Postpaid 12 month plans average data (GB)
<25 2.17 1.67
25-35 3.01 2.94 1.50
35-45 6.15 6.58 7.75
45-55 8.24 8.77 12.25
55-65 14.85 13.00 19.00

Source: Average data calculated by comparing plans in Canstar Blue database, February 2017.

As the table shows, cheap prepaid plans actually offer more data, on average, than postpaid no contract plans. While the latter become more competitive at higher price points, the prepaid category again comes to the fore when we get into the big bucks of around $60 per month. However, it should be noted that 12 month postpaid plans offer the most data, on average, once monthly costs reach around $35. Now the question becomes: Are you willing to lock-in for a 12 month contract?

Of course, these figures represent average postpaid and prepaid plans, and you should always pick a plan based on its individual features. You’re sure to find some standout offers in both categories if you look hard enough. So let’s review some of the leading prepaid and postpaid plans currently on offer.

Prepaid Mobile Offers

If prepaid is your cup of tea, be sure to check out the latest offers from the supermarket telcos. ALDI Mobile and Coles are very competitive in this space, offering some of the cheapest unlimited plans around. They are matched, however, by the likes of Boost Mobile, OVO Mobile, TPG, Kogan Mobile and Yomojo. Here are the latest offers if you’re looking at around 1GB of data with unlimited talk and text.

Postpaid Mobile Offers

If postpaid is your bag, there are several service providers all competing for your custom. When it comes to no contract plans, Vaya, Dodo, iiNet, Jeenee Mobile and Exetel are amongst the leaders of the pack if you’re looking for 1GB of data plus unlimited talk and text.

When it comes to 12 month postpaid plans, this is where the big guys like Telstra and Optus come out to play with their best value.

Whichever way you decide to go, just be sure to compare a wide range of offers to find the best plan for your specific needs and preferences.

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