Your Cell Phone Bill: Is Prepaid a Better Option?

by Stacy Francis, CFP®, CDFA

At a recent family get-together, the conversation turned to cell phones. More specifically, my sister-in-law had received a statement that morning. Stunned that she had used less than a third of the minutes she paid for, she wanted to know whether prepaid would be a better option.

What an excellent question! And indeed, many families could save big by making the switch. However, below are a few things to consider first:

  1. How many minutes do you use – really? If you normally spend 600 minutes per month on the phone and the measly 100 minutes on your latest statement is the result of your phone being broken most of the month, you should probably stick with your plan. But if you find that during the past six months or so, you have never even used half of your minutes, prepaid could be for you.
  2. Could it be that you just have the wrong plan? Have you looked at different plans and providers? From unlimited plans with majors such as T-Mobile and AT&T to cheaper options with lesser-known companies like Tracfone, chances are you could find a plan better tailored to your needs.
  3. What about the handset? When you commit to a plan, most providers will throw in a free (or at least heavily discounted) handset. With prepaid, you typically need to purchase your own. If you have an extra handset, this may not make a difference. But if you don’t, you need to factor this price into the calculation.
  4. Are you shopping for yourself or for your entire family? Family plans tend to be cheaper than individual ones. On the other hand, if you have teens, between chatting with friends and text messaging, a prepaid plan could save you a fortune.

Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.