Wireless Contract or Pay-As-You-Go: Which is Better?

by Aeyne Schriber on March 10, 2011 in Wireless

If you are looking to purchase access to a wireless connection the difference between a wireless contract and a pay-as-you-go plan can be quite significant depending upon how much you use your connection.  To make your decision more complex there are an increasing number of service providers both contract and pay-as-you-go competing for wireless customers.  Which is better and how do you choose?

Let’s analyze both options to provide you with the information you need to make an informed decision based on your needs and your lifestyle.

Pay-As-You-Go Wireless

This type of wireless service is also known as prepaid wireless and you will see it referred to under both names if you research the Internet to discover your options.  If a service contract does not appeal to you then pay-as-you-go or prepaid may be just what you need.

Pay-as-you-go is relatively new in the United States however it has been used for a longer period of time in other parts of the world.  With the tough economy, the US consumer is starting to take a second look at going with prepaid or pay-as-you-go wireless.  When you think about it, you are not locked into a contract where you are penalized for an undisclosed amount of money if you try to terminate the contract.

Pay-as-you-go wireless also requires no credit checks, which is one less source where you are required to reveal your personal information. With the increase in identity theft this can be a definite advantage.  Additionally, if you have been struggling with the current economy you do not have to worry about any dents in your credit score.

With a pay-as-you-go service you pay for your minutes in advance which is why none of the providers are concerned if you have been late on a few bills.  One disadvantage of this arrangement is depending upon the provider you choose you may lose your minutes if you do not use them up.  On the other hand, there are providers that will allow you to rollover your minutes when the deadline date approaches.

Wireless Contract

With a wireless contract the minutes do not expire as they do on a pay-as-you-go arrangement however, you are locked in for the life of the contract unless you want to pay an exorbitant fee to terminate the contract.  Wireless contract providers also require a credit check to ensure they are going to get their money.

If you have a few blemishes on your credit report it is usually a hassle to acquire a wireless contract.  On the other hand, if you credit is good and you experience some temporary economic hard times during the course of your contract your late payments will remain on your credit report for years after the fact.  What’s more the wireless providers entice you into the long term contract by offering you a high tech phone at a discount or sometimes for free, or so they claim.

Another point to consider is when wireless contract providers add services it usually reflects on your monthly payment.  During the life of the contract your monthly charge gradually goes higher and higher in small increments.  Additionally, if you commit to a long term contract, technology changes so quickly that you may find yourself with an outdated phone where you must shell out more money to obtain an upgrade.

So how do you choose between a wireless contract and pay-as-you-go?

Well first, you should take note of your habits and the amount of time you spend on the phone both talking and texting or surfing the Internet.  You should also consider the days of the week and the time of day you use your phone the most.  Weekdays cost more than weekends and depending upon your habits a wireless contract may be cheaper than a prepaid arrangement or vice versa.

Also, if you like to change phones, as technology advances this could cost you more if you are involved in a wireless contract.  If your needs change during the course of your current contract some providers will require you to commit to another contract which keeps you committed for a longer period of time and often involves additional fees.

It is also important to keep in mind that your consideration should involve more than just saving money. You also need to decide if a long term contract with an included phone is appropriate for you or if you are better off using a high quality pay-as-you-go arrangement.  You simply have to weigh your options along with your needs and then make the decision that is most appropriate for your lifestyle.

Each method has its advantages and disadvantages all of which depend upon your needs and how you plan to use your phone.  There are an increasing number of providers out there. Make sure you give each careful consideration before you make a final decision.

 

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