Phone plans: prepaid vs postpaid

Both prepaid and postpaid phone plans offer certain advantages, but when it comes to cutting back on costs, which one is right for you?

Before a salesperson starts telling you which plan is the best value or comes with the newest phone, think about how often you use your phone and how vital it is to your lifestyle. Here are a few points to get you going.

  • Do you already own a phone, and are you happy with it?
  • How many calls and texts will you make each week? Multiply this by four for a rough idea of how much call and text allowance you will need.
  • How much data will you use in a month? If you’re just going to be checking emails and surfing the web from time to time, you won’t need much. But if you’re planning on watching lots of videos on your phone then you’ll need a lot more data. has a great chart that can help you to determine your data requirements.
  • Will you be travelling overseas soon? And will you be using your phone while overseas?

Pros and cons

With your needs and wants in mind, let’s take a look at the differences between prepaid and postpaid plans.




Up-front costs

Small upfront cost for a prepaid SIM and you must provide your own phone


Early termination fee


Usually yes, however there are postpaid plans available with no lock-in contract

Risk of bill shock



Credit expiration or rollover

Credit expiration varies significantly

Some providers give you as little as four weeks to use your credit, others may give you up to a whole year

Rollover varies greatly with different plans or providers

Different rules may also apply for call, SMS or internet data

Phone included


Lock-in contracts are available with a phone included


Less value for money

More value for money, however required monthly payments can counteract this


Prepaid users run the risk of being unable to make a phone call in an emergency if they are out of credit

Postpaid users must pay a fee every month, even if the phone is not being used


Is it cheaper to buy a phone outright?

One of the big differences between prepaid and postpaid plans is the inclusion of a phone. Having to buy a phone outright can be a huge blow to your budget, but will it cost more in the long run paying for it month by month?

We took a look at the least expensive iPhone 6s Plus 16GB plans offered by the major telcos in Australia to calculate the difference.

Telstra: $97 per month ($55 plan + $42 phone) for 24 months = minimum cost $2328 ($1320 plan + $1008 phone)

Optus: $81 per month ($40 plan + $41 phone) for 24 months = minimum cost $1944 ($960 plan + $984 phone)

Vodafone: $85 per month ($40 plan + $45 phone) for 24 months = minimum cost $2040 ($960 plan + $1080 phone)

Virgin: $67 per month ($30 plan + $37 phone) for 24 months = minimum cost $1608 ($720 plan + $888 phone)

Cost of phone outright from Apple Store: $1079

As you can see above, the plans generally came out on top, but not necessarily by a large margin. It’s also worth noting that more competitive prices can be found from online locations, such as eBay.

All prices correct as of 12 July 2016.

Author’s note

In my opinion, the best option for cutting back on costs is to find a SIM only/BYO phone plan that works for you. These plans are a hybrid of prepaid and postpaid plans. You receive the savings of a postpaid plan, as well as some of the flexibility of a prepaid plan.

Whistle Out allows you to search plans from over 30 different providers in Australia, so if you’re thinking about changing plans it’s worth a visit.

Do you prefer prepaid or postpaid? Let us know in the comments below.

Related articles:
Do you still need a landline?
The top five gadgets to look out for in 2016
Time to upgrade your smartphone?

YourLifeChoices Writers
YourLifeChoices Writers
YourLifeChoices' team of writers specialise in content that helps Australian over-50s make better decisions about wealth, health, travel and life. It's all in the name. For 22 years, we've been helping older Australians live their best lives.
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