Cell Phone Users Save Hundreds By Switching To Prepaid Service

By Paula Ebben, WBZ-TV
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BOSTON (CBS) – Just about everyone loves to complain about their cell phone bill, but few have been willing to try a more economical option that’s been around for years. That’s changing. More users are ditching the traditional cell phone service for the prepaid variety. It’s a move that has the potential to save some users hundreds of dollars a year.

With six kids, Tiffany Wong goes out of her way to find money-saving options and that’s why she switched to prepaid. “If I can get the same service for less than half of the money, I’m going for it,” she said.

Tiffany got a prepaid Droid which includes unlimited texting, internet service and phone calls for about $40 a month. Her old contract-based carrier was about $100 for the same service. With the extra $60 dollars, she was able to buy a phone for her son who uses it to surf the web. “Since there are eight of us, there’s always someone on the computer,” he said.

For years, prepaid service was seen as something limited to those with poor credit, but it’s become more main stream in recent months. In fact, the market for these phones has tripled in just the past year.

With prepaid service, you don’t have to make any contract commitments and you pay a flat fee up front. That eliminates any surprise overage charges. According to John Breyalt of National Consumers League, that can be a huge problem for families with teenagers. “You wouldn’t want to give them a high end smart phone with an expensive postpaid plan where they might get overages and blow out your family budget,” he warned.

Even iPhones have now entered the prepaid market. Virgin Mobile and Leap Cricket have recently announced prepaid service for the iPhone. T-Mobile says it can easily switch over an existing iPhone by swapping out the SIM card. “Often those customers find even with a penalty to cancel a contract, they’re able to save money by switching,” explained Larry Petrone of T-Mobile.

There are a few drawbacks. You’ll have to pay full retail for the phone, which can be five hundred dollars or more in some cases. There are also not many prepaid family plans available, so you’ll have to do the math to figure out if it makes financial sense for you.

Tiffany swears she’ll never use a contract phone service again.

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