Prepaid vs postpaid plans

There’s less of a difference than you might think between the two basic types of phone plans.

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What is prepaid and postpaid?

Prepaid and postpaid are the two main types of mobile plans that you can get in Australia. They both work the same way, except there's a difference in when you pay for your mobile usage.

Much like your regular bills such as utilities and credit cards, postpaid plans are paid for at the end of the month, so you're paying for your mobile usage after you've used the plan.

Prepaid plans are, as the name suggests, pre-paid at the start of each month, rather than at the end. This means you pay for your mobile service up front, before you've used any of it.

Prepaid vs postpaid

What's the difference between prepaid and postpaid?

The difference between prepaid and postpaid mobile plans is when you pay for your mobile service. On postpaid, you'll be charged for your usage at the end of the month. Prepaid requires you to recharge upfront before you can make calls or use data.

Since you're paying for your usage upfront on a prepaid plan, this means that instead of just paying "per month" for your mobile plan, you have recharge periods instead. These recharge periods are usually between 28-30 days, although shorter and longer periods do exist.

This just means that the amount you pay at the start of the month will last for however long your recharge period is. The longer the recharge period, the fewer times you'll need to pay your mobile plan during the year.

  • Keep in mind that because you're paying for your service upfront on a prepaid plan, it means you'll never have to pay any excess fees. If you're going for a postpaid plan, you might have to pay excess fees at the end of the month if you go over your plan limits.

Here's a quick summary of the main features of prepaid and postpaid plans:

PrepaidPostpaid
Pay your bill at the...Start of the monthEnd of the month
Can you get a new phone?NoYes
Is there a contract?NeverSometimes
Excess data chargesNoYes
Expiry periodUsually between 28-30 daysMonthly

In the past, there was more of a difference between the two types of plans. Prepaid plans were seen as more budget-friendly options with fewer plan features, while postpaid plans were better bang for your buck because you got more extras included.

Nowadays, the features you get on prepaid and postpaid plans are almost the same. The prices don't differ too much between the two types either.

One thing that might be important to you is whether you can get a phone on a plan with these types of plans. If you're looking to grab the latest iPhone on a plan, you'll need to get a postpaid plan.

Prepaid plans don't come with phones attached, so you'd need to buy your phone outright if you want it with a prepaid plan.

Prepaid vs postpaid: Which is better?

When choosing between these plans, there are two main questions to answer:

  • Do you need a new phone? If you want a new handset on a plan, postpaid is your only option. Alternatively, buy the handset outright and pair it with any type of plan.
  • Are you worried about excess fees? If you want control over exactly how much you spend per month, prepaid is your best bet.

In the past, prepaid and postpaid plans played a bigger difference because mobile technology was still relatively new. Prepaid plans were seen to be more of a hassle because you only had a certain amount of credit that you could easily run out of. Remember when you used to have a prepaid plan and ran out of calls or texts and needed to recharge your plan at a local shop?

Thanks to credit cards and automated services, you don't have to run to the local Woolies to fill up your prepaid plan anymore because you can usually set up an auto-recharge function on your plan.

Plan type shouldn't matter too much these days. The best plan for you will be one that gives you enough data and inclusions for your needs, rather than the type of plan it is.

Is prepaid or postpaid better value?

We've taken all the prepaid and postpaid plans in Finder's database to calculate the average data amount you'd get on plans within different price categories. You'll find that prepaid plans tend to provide better value for lower data allowances, while postpaid plans have better value at bigger data values.

Last updated January 2021.

Note that prepaid plans may seem to perform better at certain price points due to bonus data included on some recharges. These bonus data offers are often available on plans when you sign up but only last for the first couple of recharges, before your monthly data allowance drops by over 50%.

So while a prepaid plan might appear to be great value when you sign up, the value could drop significantly after your first 3-4 recharges. If you're planning to stick to a prepaid plan for a longer term, look for pricing and data that won't disappear after your first couple of months.

Frequently asked questions

Can I transfer my number from prepaid to postpaid?

Yes. You can transfer your mobile number from any plan to any other plan, no matter whether it's postpaid or prepaid. Check out our guide to porting your number here.

How can I tell if my plan is prepaid or postpaid?

The easiest way to tell whether your plan is prepaid or postpaid is to check how you're billed. If you're sent a bill at the end of every month, you're on a postpaid plan. If you have to go to your account or app and recharge manually, or have an auto recharge set up for the start of the month, then you're on prepaid.


Image: Getty

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