Prepaid vs postpaid: Which plan is better value?

Aussie 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 phone plan market, we’ve broken down two of the biggest buzz words in the mobile phone world – prepaid and postpaid. How do they differ, and which plan will give you the best value?

Prepaid vs. postpaid: Plans at a glance

Before we get into the details on what a prepaid plan is and what a postpaid plan is, the following tables show a range of prepaid and postpaid plans. Simply switch between the tabs to see the different plans.

Here is a selection of postpaid plans from Canstar Blue’s database with a minimum of 10GB of data, listed in order of standard cost, lowest to highest, then by data allowance, largest to smallest. Use Canstar Blue’s phone plan comparison tool to see a wide range of plans on offer from mobile providers. This table includes products with links to referral partners.

Here is a selection of prepaid plans from Canstar Blue’s database with a minimum of 10GB of data, listed in order of standard cost, lowest to highest, then by data allowance, largest to smallest. Use our comparison tool to see a wide range of plans from other providers. This table includes products with links to referral partners.

Compare Mobile Phone Plans

What’s the difference between prepaid and postpaid?

You might have seen the words ‘prepaid’ and ‘postpaid’ floating around when referencing a SIM plan or mobile phone plan. These two plan types have some similarities, but also a few differences between them. As for which plan type is best, it will all come down to what your personal preference is and which plan will provide the best value for money for your needs.

What is a prepaid phone plan?

A prepaid mobile phone plan is a plan where you pay the provider a certain amount of money upfront, which is then converted into mobile credit which you can then use on calls, texts, mobile data or a combination of all three, depending on the plan. Some prepaid plans come with a set amount of call time and messages, others come with unlimited calls and SMS, and some include pay-as-you-go (PAYG) rates, where you’re charged only for what use on a per minute, per message, or per megabyte basis.

Prepaid plans with unlimited talk and text are now the most common, leaving data inclusions as the main point of difference between plans and how much you’ll pay. Often prepaid plans mainly appeal to users who prefer to pay for their service upfront, and not run the risk of incurring any extra charges or bill shock at the end of the month. One downside is that if you use your inclusions before your expiry period is up (usually 28-30 days), you’ll need to recharge to keep using your plan. If you’re constantly using up your inclusions before they expire, you could end up spending more each year than if you were on a more expensive plan or a postpaid plan.

If prepaid sounds like the right option for you, there are plenty of plans and prepaid providers to choose from. If you’re willing to spend more than $30, you can generally get access to well over 10GB of data. The following table includes a selection of prepaid plans from Canstar Blue’s database, listed in order of standard cost, lowest to highest, then by data allowance, largest to smallest. Use our mobile phone plan comparison tool to see a wider range of plans from other providers. This table includes products with links to referral partners.

What is a postpaid phone plan?

A postpaid mobile phone plan allows 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. This means you’re always able to use your phone, even if you’ve gone over your monthly inclusions. However, if you don’t keep on top of your usage, especially data, you might end up with a bigger bill than you expect.

One way to eliminate the ‘bill shock’ from going over your data allowance is to switch to a plan with no excess data charges, which are available from Telstra, Optus or Vodafone. These plans will let you keep using your data after you’ve used up your inclusions, but with that extra ‘unlimited’ data available at a capped speed.

Postpaid plans are typically available over a couple different plan lengths — month-to-month or a 12-month contract (with some plans also over 24 months or more). Monthly plans are becoming more common, with only a few providers offering 12-month postpaid contracts (often with more data for your money than the month-to-month counterparts).

If you like the sound of a postpaid plan, there are plenty of postpaid telcos to choose from with plans ranging from cheap plans with small data inclusions and up to pricier plans with lots of data, even unlimited data. The following table includes a selection of postpaid plans from Canstar Blue’s database, listed in order of standard cost, lowest to highest, then by data allowance, largest to smallest. Use our phone plan comparison tool to see a wider range of plans from other providers. This table includes products with links to referral partners.

What are subscription plans?

A third type of plan has entered the Australian market in the form of ‘subscription’ style plans. These plans are typically closest to a prepaid plan where you pre-pay upfront, but the ‘subscription’ part is that the plan will automatically renew each month or however long the plan period is. Both Felix mobile and Gomo offer prepaid ‘subscription’ plans, with Felix offering one plan only with unlimited data (at capped speeds of 20Mbps), while Gomo offers a few different plans with data inclusions varied between plans.

Telstra also offers a subscription plan of sorts in the form of its Upfront plans. These plans are technically still considered postpaid plans with monthly bills (which you can buy either as SIM-only or bundled with a new phone) and are different to Telstra’s selection of prepaid plans.

Instead of paying for your monthly bill at the end of the billing cycle, you’ll pay upfront with Telstra’s AutoPay, with your plan fees taken from your nominated bank account, credit or debit card. Telstra claims that this payment method means you won’t need to worry about late payment fees and it takes the stress out of remembering to pay your bill. However, for some people, being charged for your plan upfront might impact on budgeting and it essentially negates some of the positives of a postpaid phone plan, as you technically pre-pay for your plan.

What if I want a new phone?

If you want to pick up a new phone with a phone plan, you can technically get a new handset from telcos bundled with both prepaid and postpaid plans.

The most common way of buying a new phone from telco is the ‘phone on a plan’ option. This is typically a postpaid phone plan bundled with a new device. You’ll pay for your phone over 12, 24 or 36 months (depending on the telco) and your phone repayments are split into monthly instalments over the contract length. You’ll then pick your choice of postpaid plan to bundle with the device, with each monthly bill including the device payments and your phone plan fees. Depending on the phone and plan you choose, these plans can easily cost over $100 each month.

Technically you can pick up a phone with a prepaid plan from several telcos. However, you’ll pay for this device upfront and then need to bundle it with one of the telco’s prepaid phone plans. There usually aren’t as many choices of prepaid phones, so unless you like the convenience of purchasing a phone and a plan from the one provider, you might be better off buying a new phone outright from a retailer and then bundling with your choice of SIM-only prepaid plan.

Which plan type is better — prepaid or postpaid?

Postpaid plans: Pros

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, which is especially useful in an emergency. Postpaid plans also provide the convenience of auto-renewing every time, meaning there is no manual recharging required and you really need to monitor your usage.

Postpaid plans also have a reputation for offering better value than prepaid deals, as you might get more data for your money. If you’re after a new phone, generally you will need to go on a postpaid plan, but it does make it more affordable to pay off a device over a set time frame rather than paying upfront for the latest iPhone or Samsung device.

Postpaid plans: Cons

The major downside to postpaid plans is that you run the risk of incurring extra charges for exceeding your plan’s limitations. If you’ve heard the expression ‘bill shock’ that’s usually in reference to overspending significantly and getting a big bill at the end of the month.

Excess data charges in particular can be costly, usually about $10 per 1GB, 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 you’ll continue to be billed and you might need to pay an early exit fee.

Prepaid plans: Pros

Phone plan

The main benefit of prepaid plans is that it’s a simple ‘get what you pay for’ type deal, in that after your call credit or data is gone, that’s it, no surprise charges to be found. This makes prepaid plans a smart option for parents giving their child their first mobile phone plan. It seems reasonable to suggest that prepaid plans are a good entry-level plan type for anyone given their simplicity.

Prepaid plans: Cons

The main downside of prepaid phone plans is basically the flip reverse of the pros. While avoiding the potential shock bills of postpaid plans, prepaid plans could leave you high and dry when you’re out of credit and really need to make a phone call or use mobile data. While you can recharge earlier, or add on extra inclusions, such as a data pack, it can cost you more if you do this regularly. Also, as prepaid plans are usually over 28 or 30 days, you might recharge your plan more than 12 times per year (compared to postpaid plans with 12 monthly bills per year), which could cost you more overall.

Other general tips for picking the right plan for you

  • Most importantly of all, understand your data usage and how much mobile data you need.
  • Which mobile network do you want to use? There are three networks in Australia owned by Telstra, Optus and Vodafone.
  • How much will you be charged for excess data (if you have a postpaid plan), or for recharging (if you have a prepaid plan)?
  • If you’re between phones, think about whether you need one of the big name smartphones, or you could save by choosing a cheap phone and bundling with a SIM-only plan.

Which is better value – prepaid or postpaid?

There has traditionally been a perception that postpaid plans offer superior value to their prepaid counterparts, but is this really the case?

As the tables on this page show, it’s pretty much neck-and-neck. Prepaid plans offer a lot more value for money than they used to, however postpaid plans might offer more perks. Most prepaid and postpaid plans also include unlimited standard national calls and SMS, so data and other extras are often where you might see the biggest difference.

If you like the flexibility of a no lock-in, you might be torn between the flexibility and value included. You could always try the telco out for a month and then switch to a contract if you’re happy with the service. Either way, prepaid or postpaid plans both offer some standout value if you look hard enough.

Should I choose prepaid or postpaid?

The mobile service you should choose depends on how you use your phone, or just your personal preference for one type over the other. If you’re a fairly light user who doesn’t require much data, a cheap prepaid plan with a long expiry period could be the way to go. However, there are also some very cheap postpaid plans with small data inclusions, so if you’re a light user, there are choices.

Ultimately it comes down to your preference. 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 best value for money for your needs.

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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