Key points
- Prepaid plans offer flexibility and savings — no credit check or contract.
- Contract plans bundle perks, family discounts, and device financing — but cost more in the long run.
- The right choice depends on how much data you use and whether you upgrade phones frequently.
Most cell phone companies are phasing out traditional two-year contracts, but the difference between… Prepaid and Postpaid (contract style) Plans are still important.
In 2025, most major carriers (AT&T, Verizon, T-Mobile) will now offer:
- Prepayment Plan with brands like Cricket, Visible and Metro.
- Contract or deferred payment Options with monthly billing, device payments, and premium perks like faster 5G access and streaming subscriptions.
Data speeds, taxes, and perks vary widely, so price alone doesn’t tell the whole story. And if you’re a student, there are special student cell phone plans that might work for you!
Average monthly costs in 2025
Here’s why this is important – the average monthly cost of prepaid cell service is usually much cheaper than postpaid/contract plans:
Plan type | Cost per line | Family cost (4 lines). | Notes |
|---|---|---|---|
Prepayment | $15 – $50 | $80-$120 | There is no credit check |
a contract | $65-$90 | $140-$220 | It may have added taxes and fees |
Prices reflect national averages for unlimited data plans. Regional carriers and MVNOs may offer cheaper rates.
Prepaid plans: Pay first, save more
How it works: You pay before you use the service, often monthly or quarterly.
Pros:
- There is no credit check or contract.
- Easier to switch carriers at any time.
- Cheaper monthly rates for light or medium data users.
- Bring your own phone to avoid hidden device costs.
cons:
- You may lose service if you forget to pay.
- Data may be slowed down (deprioritized) during network congestion.
- Fewer perks like free roaming, airtime packages or phone financing.
Good suitable for: Students, budget-conscious users, and anyone who feels comfortable buying a phone outright.
example:
Visible (owned by Verizon) offers unlimited talk, text, and data for $25 a month—no annual contract.
Contract Plans: More perks, more cost
How it works: You are charged after you use the service, often through a funded device or long-term commitment.
Pros:
- Access premium networks and faster 5G speeds.
- Bundled privileges (streaming services, international roaming, hotspot data).
- Family plans often lower the cost per line.
- Option to finance or upgrade devices every 1-2 years.
cons:
- High monthly bills with additional taxes and fees.
- Requires credit check or deposit.
- It’s hard to switch carriers if you’re financing the phone.
Good suitable for: Families, heavy data users, and those who want convenience and bundled benefits.
example:
T-Mobile’s Go5G Plus plan includes 100GB of premium data, Netflix, and international texting — but it costs about $90 per month for a single line.
Cost of prepaid cell phone plans
Let’s consider the actual costs per month and throughout the year when comparing a prepaid cell phone plan to a contract plan.
Are prepaid cell phones really cheaper?
Let’s take a look at a few of the best prepaid mobile phone companies that offer you at least 5GB of data every month.
Mint Mobile
Mint Mobile offers prepaid plans starting at $15 per month for unlimited calling, texting, and data for the first year.
Check out Mint Mobile’s prepaid phone plans here.
Mobile promotion
enhancesis another low-cost cell phone provider that offers an unlimited plan with talk, text, and data for $25 per month forever. With that, you get 30GB of premium data.
It’s important to note that this plan does not include a device, nor does it include taxes – so you will likely have more out-of-pocket expenses. They offer slightly more expensive plans that include more features.
Cricket game
Cricket’s Home plan costs $35 per month, and you get unlimited talk, text, and data. The only requirement is to set up automatic payment.
So, on average for a prepaid plan that offers you at least 5GB of talk, text, and data (the average amount of data cell phone users will use in a month), you’re looking at a payment of $50 per month.
Taxes and additional fees are usually included in this cost, so there are no additional monthly surprises. Also with prepaid networks, you can bring your own device or purchase one outright (although some like MetroPCS have deep discounts on phones year-round).
There are smaller plans if you want to go a little lower and still get good service.
Cost of contract cell phones
Now let’s compare this with their larger contract counterparts. For a complete list of the best cell phone plans, check this out.
AT&T
The ATT Unlimited Starter plan starts at $65 per month. This plan includes unlimited talk and text, but ATT is clear that it may slow down your data. However, they are now offering a special offer of $25 per month if you pay upfront for the entire year.
However, this does not include taxes and fees, and if you buy a phone from them, you have the opportunity to make a zero deposit upfront and split the payment for the phone into smaller payments over several months.
So, in reality, your monthly bill might be closer to $100 per month.
Verizon
Verizon has plans starting at $70 per month for unlimited data as well (drops to $35 per month if you have 4 lines). Taxes and fees are additional on top of the $20 device fee for smartphones. Also, if you don’t sign up for paperless statements, you’ll jump $10 per month.
Here too, the monthly payment will likely be closer to $100.
Read our full Verizon Wireless review here.
Overall, as you can see, you’ll likely pay more on a contract cell phone plan than on a prepaid plan.
How to choose?
Ask yourself these five questions:
- How many lines do you need? (Family plans may prefer contracts.)
- How much data do you use? (Less than 15GB/month? Prepaying may save you.)
- Do you travel abroad? (Contracts provide better roaming support.)
- Do you update your phone every year? (Postpaid plans simplify this.)
- Do you want perks or flexibility? (Choose what matters most.)
Concluding thoughts
If you like Freedom and lower billsPrepaid is the smarter choice.
If you like Premium perks, family savings, and seamless device upgradesContract plans can be worth the extra cost.
Either way, check for hidden taxes and fees, and always compare the total cost – not just the advertised price.
What’s your experience with contract plans versus prepaid plans? Your thoughts are welcome in the comments.
Editor: Clint Proctor
Reviewed by: Claire Tuck
Prepaid Cell Phone Plans vs. Contract Phone Plans: Which is Better? appeared first on The College Investor.
