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Pre-paid or post-paid?

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Before you go shopping for a mobile phone or a plan, you’ll need to think about what you need, what’s on offer and what you can afford. To begin with, you will need to decide if you want a prepaid or a post-paid plan.

 What’s prepaid and how does it work?

  • Getting a prepaid plan means that you will not be locked into a contract and you don’t have to pay monthly charges.
  • You pay to set up your phone number and put money (called credit) onto an account. Every time you make a call, send a text or use the internet on your phone, its cost will be taken out of your credit until it runs out.
  • When your credit runs out, you buy more credit and top it up by ‘recharging’.


Post-paid plans used to be called a “cap” but phone companies aren’t allowed to do this anymore. 

What’s post-paid and how is it different?

  • You’re locked into a contract with your phone company for a contract term (usually ranging between 1 month and 24 months).
  • You’ll have to pay a minimum amount (called a minimum monthly spend) every month until your contract term is over.
  • Your minimum monthly spend will only cover a set amount worth of calls and text and a set amount of data (called your monthly allowance). Not all plans come with data.
  • If you use more than your monthly allowance, your phone company will charge you extra money on top of your minimum monthly spend. This means that if you don’t keep track of how much you’re using, you could end up with a bill which is much larger than you expected. 

What about post-paid month-to-month plans with ‘no lock-in contracts’?

  • You pay a minimum monthly spend at the end of the month PLUS any services you used on top of your monthly allowance.
  • Some ads for these plans say ‘you can leave any time’ or ‘there is no contract’. This means that it is up to you to choose how many months you want to continue for, but you are automatically signed up on an on-going basis until you tell your phone company you want to stop.
  • If you leave in the middle of a month, you still need to pay for the whole month. It’s important to check if you need to give your phone company notice before you leave. If your phone company requires 2 months notice, you’ll need to pay for those 2 months no matter how much you use.

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Last reviewed June 2013