Monthly cell phone contracts versus pay-as-you-go contracts

Cell phones tend to come in two flavours in terms of the method for which to pay for them. These can be monthly contracts, whereby you pay a (usually) set fee, and pay-as-you-go contracts whereby you prepay for a set amount of usage - once you have used your allocated amount, the user will need to 'top up'. Here, I shall be discussing the pros and cons of both.

Pay monthly contracts: Pros and cons

Pros Many pay monthly contracts sometimes come with the offer of a brand new mobile telephone either given free or offered at a heavily subsidised price if the user agrees to signing up for a minimum set period. Typically, these range from 12, 18 and 24 months. Phone tariffs are also considerably cheaper than pay-as-you-go contracts. With a pay monthly contract, the telephone company will often throw in other deals, some of which I have highlighted below: - Unlimited text messages: No limit to the amount of texts you can send per month. - Free minutes: An allocated amount of minutes that you can use whenever you want within that month. Cons There are a number of cons to be considered: - People with a low or bad credit might not be accepted to sign up for a contract. - The cost spent monthly might actually be higher than that of a pay-as-you-go contract, especially for low usage customers.

Pay-as-you-go contract: Pros and cons

Pros Phone users who have a perfectly fine phone and don't tend to use it much might find that having a pay-as-you-go contract suits their needs adequately. Being tied in to a pay-as-you-go contract can often work out as far less expensive, especially for light users. Below are some benefits: - You just pay for what you use and you do not have to pay anything else. - Pay-as-you-go contracts are perfect for people who tend not to make many calls or send many text messages and are great for just receiving calls and messages. Cons - Telephone calls can be very expensive compared to pay monthly contracts. - Once your credit has run out, phone calls or text messages cannot be made without topping up again.