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What is a prepaid plan?
- They require regular upfront payments, versus postpaid plans, which are billed at the end of each contract period.
- Prepaid plans have expiry periods that range from as little as 10 days up to 365 days, though most are around 30 days.
- Prepaid plans work on a recharge basis, where you pay for an allotment of calls, texts and data to use within a period of time. Once you have used your call credit, or reached your expiry date, you buy another recharge.
- Recharges can be purchased directly from your phone, by calling your provider or using its website, with some larger providers also offering prepaid purchase options at supermarkets and other retail outlets.
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Alex Kidman is a multi-award-winning consumer technology journalist and the Tech & Telco Editor at finder.com.au. He's been writing about consumer technology topics for more than two decades.
- Fully control your mobile spending
- Never be hit with bill shock or unexpected spending
- Less commitment - switch carriers easily
- Retain your mobile number with our guide on how to port your mobile number.
- Service is cut off unless you recharge or top up on time
- Data is usually more expensive when compared with postpaid plans
- Expiry periods can be misleading - e.g. 28 days vs 1 month plans
- If you don't have a device, buying one outright can be an big upfront cost
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A prepaid plan can also be a money saver compared to a contract plan. The total cost of buying a handset outright and then paying for a prepaid service across 24 months can be cheaper than a contract deal. Our mobile phone plan comparison tool can help you decide, by helping you compare the cost of outright buy plus prepaid to a contract deal for any phone available in Australia.
Prepaid vs Contract plans: our video guide
Can I get a phone with my prepaid plan?
The typical answer to this question is no, because prepaid plans are configured for those who already have their own phone. If you want a new mobile phone to go with a prepaid service, you're going to have to shell out for its entire cost upfront.
That said, there are a number of handsets that are sold as "prepaid" phones. These are usually cheap phones and are often locked to a given provider, so if you do want to switch providers at some point an unlocking fee may apply.
How should I compare prepaid plans?
- Cost of recharge: If your usage varies, it makes sense to use the flexibility of a prepaid plan by altering your monthly recharge amount, which you can typically do without penalty. However, you need to be aware of the minimum recharge amount required to maintain your phone service.
- Data charging: Different prepaid plans come with different levels of data, and with the rise of "unlimited" call/texts packages, this is a key differentiator. If you're busy on your smartphone, go for a plan with plenty of data, but also make sure you can easily buy data top-ups and that your provider counts data charges per KB block, rather than a larger amount as this will eat up your data quickly. We have a guide to how different providers count data if you want to know more.
- Network coverage: While there are many prepaid providers, they're all using one of just three networks, run by Telstra, Optus and Vodafone. Not all providers have access to those carrier's 4G networks, or the full network map. While network coverage maps are largely indicative rather than entirely accurate, they're a good gauge of overall coverage that can help you decide which provider to choose. Our guide to the difference between 3G and 4G covers this in more detail.
- International coverage: If you regularly make overseas calls, or travel a lot, it's worth reading the fine print on any prepaid plan. Some providers specifically target international callers with attractive rates to call overseas or even included calling minutes to popular destinations. However, if you head overseas, it's a different story; many prepaid SIMs don't offer any roaming functions for use overseas. Even if they do, the rates for prepaid roaming are generally high, so choose carefully.
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