When hunting for a phone plan, your budget is important, but the first thing you need to figure out is what kind of plan works best for you. There are two main types of mobile plans in Australia – prepaid and postpaid. As the names suggest, the key difference to these is when you pay for using the network and your phone usage – prepaid plans are paid for up front and, generally speaking, postpaid plans are paid for once a month at the start of a monthly billing cycle.
Other than the payment cycle, there isn’t a whole lot of difference between the two anymore. Gone are the days when postpaid plans used to be less flexible, coming with harder limits on data, call and text inclusions. This meant that phone bills could be unpredictable and if you went over your limits, you could be hit with a very expensive bill at the end of the billing cycle.
Nowadays, most postpaid plans are more flexible and the charges for going over your allowances are less extreme. Instead of charging a fixed amount per extra MB (which can get very expensive very quickly), many providers now offer extra blocks of data in GB for a set price (e.g. $10 per GB), while others let you keep using data for free but reduce the download speed. These changes mean you’re now less likely to get slugged if you accidentally go over your data limit on a postpaid plan.
That’s led to postpaid plans becoming more popular, and the main reasons people opt for prepaid plans are convenience and cost-cutting. It’s quick and easy to buy and activate a prepaid SIM and you aren't locked into any sort of contract, so you can switch plans or providers anytime you want without penalties.
Prepaid pros and cons: Is a prepaid mobile plan the right choice for you?
A prepaid plan is a SIM-only service with an expiry period that can range anywhere from 7 to 365 days – the most popular options generally have expiries of around 28 days. When a prepaid plan expires, you’ll have to recharge it to continue to use it, and if you use all of the included data, you’ll also need to recharge to restore internet access. There are a wide range of reasons why prepaid plans work for some people, as well as reasons why they might not work for others. Here’s a breakdown on who we think would benefit from using a prepaid plan, and who we think might want to opt for another option.
Go with prepaid if:
• You want to avoid surprise charges – With a prepaid plan, you only get what you pay for, so you’ll never be surprised with extra charges.
• You want a phone plan for your kids – A prepaid plan is a good option for kids because you don’t have to worry about them going over their data allowance and costing you additional money.
• You don’t use your phone very often – If you don’t use your phone much, a cheaper prepaid plan can be a great way to save money. You generally won’t get as many inclusions as a postpaid plan, but conversely, you can avoid wasting money on things you don’t need.
• You want a long expiry – You can get prepaid plans with expiries of up to 365 days, making them handy set-and-forget options.
• You like to shop around for the best deals – If you regularly switch your mobile plan to ensure you’re getting the best deal, this is easier to do on a prepaid plan as you won’t cop any surprise cancellation fees.
Don't go with prepaid if:
• You don’t want to be cut off if you go over your limits – If you are on a prepaid plan and you use all of your plan inclusions (such as data or international calls), you won’t be able to continue using those features until you recharge. This may be a concern in times of emergencies, or if you simply forget to recharge. However, with a postpaid plan, you can continue using inclusions like data – but depending on the provider, it will either cost you extra in your next bill, or (with data) be at a reduced speed.
• If you want a new device and don’t want to pay outright – Unlike with most postpaid plans, prepaid doesn’t generally give you the option to bundle a device and pay it off monthly. So, if you’re on a prepaid plan and want a new phone, you’ll have to be willing to buy it outright.
Postpaid pros and cons: When is postpaid a better option?
A postpaid plan is one that comes with a specific allowance for calls, texts and data but if you exceed the plans limits, you won’t be disconnected from the service and can continue using the inclusions – you will, however, likely cop additional fees on your monthly bill, depending on your provider’s terms and conditions. Postpaid plans last a full month, which means you’re charged once every calendar month based on the day you began your service with the provider. Historically, most postpaid plans were charged at the end of the monthly cycle, but both Telstra and Vodafone now charge their ‘postpaid’ plans at the beginning of the billing cycle, making them more similar to how prepaid plans work.
Here’s a breakdown on some of the reasons why you might want to opt for a postpaid plan, and some reasons on why they might not work for you.
Go with postpaid if:
• You want to bundle a new phone with your plan – If you don’t want to pay for a new device outright, you can bundle it with a postpaid plan and pay it off over 12-, 24- or 36-month instalments
• You want international roaming – Some postpaid providers offer international roaming as an optional addon. For example, Telstra offers $5 a day international roaming (in eligible countries) and Optus offers $10 a day international roaming. If you’re a frequent traveller, this may be a good reason to opt for a postpaid plan.
• You need lots of data each month – We’ve found that there are more postpaid plans on the market that come with data allowances of over 100GB a month than prepaid ones. So if you happen to be a heavy data user, you’re more likely to find a postpaid plan that fits your needs.
Don't go with postpaid if:
• You want a 100% predictable bill – It can be easy to go over your included data or international call allowance on a postpaid plan and if your provider charges extra for continuing to use these, you may be hit with a larger bill than you were expecting at the end of the month.
• You want to save up unused data – Some prepaid plans offer a handy feature that lets you rollover unused data to use the next month. Most postpaid plans reset the data allowance each month however, meaning any unused data gets discarded.
FAQs
Is prepaid or postpaid better if I want a new phone?
If you don’t want to buy a new phone outright, postpaid providers like Telstra, Optus and Vodafone generally offer the widest selection of new handsets to choose from and will let you bundle a phone with a plan and pay it off over a 12-, 24- or 36-month period.
When do you pay the bill on prepaid plans?
You pay for a prepaid plan when you first buy the SIM card or activate the plan. If you want to recharge the plan after it expires or you use all the data, you will have to pay again before you can use it.
When do you pay the bill on postpaid plans?
For postpaid plans, you generally pay the bill at the end of the month. This ensures your provider can correctly charge you for any extra data, call or texts you used.
Are there excess data charges on prepaid plans?
No, you only get what you pay for with a prepaid plan, so you won’t be charged extra until you choose to recharge the plan.
