Can You Save with a Prepaid Cellphone?

When the economy went bust, the number of new cellphone users who bought prepaid plans outnumbered those who signed contracts for the first time ever in the fourth quarter of last year, according to industry analysts. Almost two-thirds of those opening new cellphone accounts opted for a prepaid program, as many users were looking for ways to cut back on spending.

Whether a prepaid cellphone will save you money depends on how and how often you use your phone. Doctors, who are figuratively joined at the hip to their mobile phones, may not be prime candidates to switch to prepaid, but some research may turn up reasons why the move would make sense. If you talk less than 100 minutes a month, for example, a prepaid plan, which can cost as little as $10 a month, is almost a no-brainer. Anything over that level could cost more than a contract, since the higher per-minute charges on a prepaid phone add up fast.

No-brainer

Many carriers also charge an added fee of $1 to $4 on any day that you use your prepaid phone. If you use your phone often, even if you don’t talk for long, those fees could lower or eliminate any savings. One the other hand, consultants say, a prepaid phone could put the brakes on your text-happy teenager. Once the minutes run out, there’s no more until Mom or Dad renews them.

Many consumers have taken the more radical step of cutting their landline to save money. Ditching a landline phones can save about $33 a month, according to a recent Nielsen study. Be aware of cellphone signal strength, however. The same study showed that many phone users turned their landline back on because of poor reception in their homes.