Prepaid vs Postpaid Plans
The Prepaid name itself is self explanatory. Basically this is a payment method for any service which you pay in advance before using it. Where as in post-paid you pay for the service after using it. The services could be anything but mostly Mobile, broadband, TV subscription, calling cards (mostly prepaid only), call termination rates, Internet services and more.
Prepaid:
This is a payment method where you pay before you enjoy the services offered. Here there are no surprise bills and you know exactly how much you are going to spend for the coming month for a particular service. One advantage here is, normally to get a service you need to pass through the credit check by the service provider but in the case of prepaid it’s not essential. This kind of prepaid option is perfectly suits for teenagers and students.
In some services like mobiles, sometime some operators charge more in call rates than in a post paid plan. For example: in wireless broadband for the same value plans the data allowance will defer for prepaid and post paid. Post paid will get more data allowance per month than a prepaid.
Normally services are time limited in prepaid plans. For an example if you buy a prepaid mobile plan it is restricted with usage duration, in the sense, you need to use credit within a month or within some defined period.
In Prepaid, you can cancel or discontinue the service whenever you want. At the same time if you have not recharged the service for more than a defined period (normally three to six months) the service will be automatically deactivated or deleted from service providers system. If it is mobile service you will lose your mobile number also.
Post Paid:
This is another payment method where you pay your bill after you use the services. Here there is no limit in accessing the services subscribed but all the services offered will be charged and bill will be sent at the end of the month, the unexpectedly high amount may surprise you. But some service providers use credit limit to control the over usage and billing disputes.
In post paid system, credit check will be performed by the service provider. Some providers verify service address and billing address as well. Here, whether you used it or not you need to pay monthly where as in some prepaid plans you can carry forward the usage allowance to next month.
One advantage in this over the other is, in prepaid if you are travelling and could not find comfortable environment to recharge the service will be deactivated where as in postpaid no need to worry until end of month or for certain period.
Service provider can offer post paid services as contract or non contract. Contact means you will be bound to use the service for contract period which is normally sixmonths, one year or two. If it’s not in contract it can be per month basis and you can terminate the service whenever you want without paying any penalty. Whereas if you are in 24 months contract you need to pay penalty called exit fee.
But one bigger advantage in contract post paid plans is, service providers offer good handset or device for free with the plan. Mobile Handsets, broadband access devices or smart boxes, worth of couple of hundred dollars will be given free with contracts.
So ultimately total 24 months real expense after deducting the handset fee from your plan is very much lesser than actual monthly payment.
Example: Consider $49 dollar monthly plan with 24 months contract. Actual total payment over the time 24 months would be $1176. But with this plan most providers offer Apple iPhone 4 or Samsung Galaxy S which is worth of $750. So actual amount you are paying for the service for 24 months is $426 ($1176-$750). So actual payment you spend for the service you get is $17.75($426 divided by 24).
But the disadvantage on this post paid contract is, in this competitive consumer technology market prices of the electronic devices will vary drastically or will go under big technological change. But you will be bounded to the device with the service provider. And the service they offer for $49 at the time of your contract will change with mobile competitive market and provider will offer lot more features now under the new $49 plan which you cannot generally switch over until contract finishes.
Summary:
(1) Prepaid and Postpaid are two different paymen
t arrangements for a service you get.
(2) Prepaid is good for teenagers and students as it is more flexible than Postpaid in managing monthly payments.
(3) Prepaid services could be easily cancelled where as post paid services are not.
(4) With postpaid contract plans you normally get a handset or access device for free where as in prepaid you need to buy.
(5) Postpaid need credit checks but not in prepaid.
(6) Generally international calling and international roaming are pre-activated in prepaid where as in post paid you need to activate it.
(7) Generally for postpaid services providers give detailed bill where as in prepaid services it’s not given.
(8) Some people get billing disputes and waste time on calling the service providers to sort it out, this is not there in prepaid.
(9) Some prepaid plans support to carry the usage of services over couple of months where as in postpaid monthly usages will be over at the end of next billing cycle and starts with fresh usage.