In the past, prepaid cellphone users often had to sacrifice the ability to get the latest and greatest smartphone in exchange for cheaper service. However, that’s not true anymore as some carriers, like T-Mobile, get top-of-the-line Android handsets and may even offer the Apple iPhone. Customers can save hundreds (or even thousands) of dollars when buying prepaid phone services compared to the usual post-paid services, which requires an upfront contract.

Approximately 30 percent of all cellphones purchased are for prepaid plans. This number is up about 9 percent from 2013. At that time, households with income less than $35,000 per year were the most frequent buyers of prepaid phones. That is quickly changing as the rise in prepaid plans has grown to include people in all income levels. To what can we attribute the change? These are five reasons why you should get a prepaid phone.

Business Use

Image via Flickr by sam_churchill

Surprisingly, one of the main factors driving prepaid phone service is business use. Many companies are skipping landlines altogether and opting for prepaid cellphones used only for business. As you know, cellphones offer many advantages over landline phones, such as texting, easy conference calling, and the ability to send photos. Business phone systems are quite expensive, and prepaid cellphones are relatively inexpensive in comparison, which is an important consideration to many new start-ups.

Better Privacy

Privacy may be another reason to use a prepaid phone versus a post-paid plan. Some customers might be using their prepaid phone as a disposable item, for only one purpose. For example, they may use their phone exclusively for dating apps like Tinder or to use solely for online purchases and subscriptions. This way they can easily avoid calls from telemarketers and scammers. Also, prepaid phones don’t require income verification or credit checks. This is especially appealing to anyone concerned about being tracked or stalked.

Usage for Children

Another reason some people are going with prepaid phones is that they are easier to manage for their children. Today, more than half of the children in the United States between the ages of 8 and 12 have a mobile phone. The average first age of a cellphone user is around 10 or 11 years old. Parents like the fact that it’s much easier to monitor the usage of their child’s minutes. They can avoid surprise charges, and parents can reload minutes as needed. Meanwhile, children learn to budget their time and how to exercise self-control.


The ability to simply switch providers without huge termination fees is very appealing to many consumers. Often, many smaller prepaid carriers lease their network access from larger carriers, so consumers can still expect decent coverage in both rural and urban areas. With a prepaid phone, you can change carriers or devices easily and without a hassle. Many people prefer to not be tied down to a specific carrier if possible, and the selection of prepaid phones has improved greatly to where all types of phones are available.

Reduced Cost

For a lot of people, the choice to go with a prepaid plan is a simple one because of the reduced expense. Prepaid plans can be as little as half the cost of a postpaid plan. It’s true that you may need to pay full price for your new smartphone if you choose to go with prepaid, and while this may sting a bit up front, the fact is that in the long run, you’ll actually pay less when you compare both the cost of the phone and your typical monthly plan.

The recent rise of prepaid cellphone purchases is an indication that consumers are clearly taking advantage of all their options. Regardless of whether they want to control their children’s usage, simplify their costs, have a devoted phone only for business, or want the lack of a contract required with postpaid phones, customers have many good reasons to go with prepaid service. Additionally, many mobile phone carriers are slowly moving away from the multi-year contracts of the past in order to encourage customers to explore more options.


By Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to [email protected]

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