Save Money by Using a Prepaid Mobile Phone

Mobile phones have certainly permeated into modern society. I scarcely remember the time not too long ago when mobiles phones were strictly the domain of yuppies and hard-nosed businessmen with their Porches and power lunches. Now every child and their pet Rover have one.

I hardly need to list the benefits of owning a mobile phone because they're a given. But what's clear is they're here to stay and phone companies will continue inventing new ways for each and every one of us to use them. These days, not only are mobile phones used to make and take phone calls, they're also portable music players, digital cameras, personal organisers, handheld gaming machines and Internet browsers.

But if you're like me and use the mobile phone to receive phone calls and text messages more often than make them, you should perhaps consider changing to a prepaid service if you haven't already. This will save you a great amount of your hard-earned money each month.

When mobile phones first became popular, mobile phone carriers would pre-package mobile phones into appealing deals where you'd get the phone for free if you signed up on a contract for say 12 to 24 months, paying a set monthly access fee. Often, you'd also get some free calls thrown in with the deal just to make it that much more enticing.

I remember being on a 24 month contract paying $20 monthly access, with $15 of free calls and a mobile phone included. It meant that I would only be forking out $5 each month for 24 months meaning I would only be paying $120 over 24 months to own the phone. On paper, this looked like a very good deal.... or was it?

What occurred to me whilst locked into the contract, was that I never really made $15 worth of phone calls each month therefore not using up the $15 worth of free calls. Worse still, the $15 worth of free calls would expire at the end of each month if it wasn't used. I was throwing away up to $15 each month in addition to the $5 each month for access and ownership of the phone. Was it really worth throwing away $20 each month for a mobile phone I'd occasionally make calls from?

The answer was a clear 'no'. As soon as the contract neared its completion, I started looking for cheaper deals. It seemed that 2 years on, mobile phone carriers had become more clever in finding ways to leech money from your average consumer. The cheapest advertised contracts around were $20 per month, and this time with even less free calls included.

After more research, I found there were contracts costing around $5 to $10 per month but with no free calls included. 'Better' I thought, but still not good enough. These $5 deals were not advertised by the carriers, and I had to specifically ask about them only to receive a reluctant response in return.

I realised I wasn't going to get any joy with phone contracts no matter how low-cost they were. Why should I be paying a set monthly fee if I'd seldom use the phone on some months?

The alternative was to go prepaid. Prepaid was a new world to me, but after a small amount of research, it made sense and I was convinced. The deal was that I would only pay for the phone calls I used. Even though I had to purchase prepaid call credits in advance, the entire amount of call credits would go directly to making phone calls and sending text messages. Not for the privilege of “accessing” a carrier's network or to own a phone. Plus, the prepaid amount had a much longer expiration period compared to a lock-in contract, ranging from a couple of months to half a year. This means the unused call credits would rollover to the next month until the expiration date of the credits. Much better.

Not too long after, I came across a phone company providing what I believed to be a fantastic prepaid offer. I could pay as little as $10 for prepaid credits each time I top up and the unused credits would last for 6 months. The call costs were billed per second rather than in 30 second or 1 minute increments. There were no flag fall costs with each call I made. There would only be one flat rate through the day. None of that peak/off-peak rubbish. It was simple, it made sense and I signed up.

The company is called iSim, and I'm still with them today. Haven't heard of them? The company is a subsidiary of Optus, one of the largest telecommunications companies in Australia. To date, it's been about 2 years since I joined iSim and only have praise for them.

From my calculations, I have only paid about $50 worth of prepaid credits over the 2 years, all of which I've used up before the credits expiring and without having to change my phone habits to do so. This works out to be about $2.10 per month over 24 months.

Now if I'd gone with the $5 per month contract, not only would I have had to pay for the $5 monthly access, but also the costs of making the calls and text messages. Say I would have spent an average of $2.10 on calls each month, that would be a $7.10 monthly cost. Now comparing that to my prepaid deal, I'm clearly saving around $5 per month! Further comparing that to my original $20 a month contract, that's a $17.90 saving! Are you convinced?

Therefore, if you seldom make phone calls or send text messages from your mobile phone, it is well worth considering switching over to a prepaid deal. You'll save a great deal of money by only paying for what you do use!