Consumer Reports: Consider Prepaid
February 16, 2009
by Carol Politi
Consumer Reports just did an analysis of the Best and Worst Cell Phone Deals. Their takeaway: “A Two Cell Phone Family Could Save $220 Per month By Going Prepaid”. They also noted that prepaid allows you to cut your expenses by decreasing usage and changing plans when you happen to need your phone less or if you want to decrease expenses any one month. Of course, I’m not unbiased – at kajeet we have always been advocates of no contract plans – especially for kids whose usage tends to be moderate.
The message is getting out – more than 45% of new mobile subscribers this year are predicted to be prepaid (Strategy Analytics). However, there is still a perception by many that the extra family plan line costs only $10 per month. The reality is that second lines cost an average of $35/month (iGr Research did a detailed analysis of this when they studied kid phone use). Why? The $10 is just the carrier service fee. It turns out that carriers actually give you fewer minutes with a family plan than they give you with an individual plan. Let’s say you have been paying $59 for your individual plan. In many contract plans you would receive 900 minutes. Move to a contract family plan and you are paying 69.99 for 700 minutes – that’s $10 more for 200 less minutes. If you really needed those minutes you would have to move up – but the next plan you can get is actually the 1400 minute plan that costs $89.99!
So families add a cell phone but actually get fewer minutes for a higher price. And contract plans encourage “supersizing” as they have overages charges that are expensive and costly. So families end up not using all their minutes every month. On top of this you incur taxes, line fees, and charges…
No wonder many people are moving to prepaid. On a prepaid plan, when the budgeted allowance is used up, the phone no longer works. This is great for budgeting and why almost 40% of parents buy prepaid phones for their kid’s first phone.
Good for budgeting, but a significant downside when you are talking about a safety phone for kids. That is why the kajeet service offers two “wallets”. One – the kid wallet – can be used to set a budget with your kids. The second – the parent wallet – can be used to pay for calls and texts to and from parent numbers so that these always go through.
Also – with kajeet there are no expensive overages and no extra fees assessed – what you see on the price plan is what you see on the bill. And if you do purchase a pak and run out of minutes, you simply pay the standard 10 cents per minute.
A bit of a sales pitch today! I am happy to see Consumer Reports assess cell phone contract plans and become a prepaid advocate. What is holding you back from considering a prepaid plan?