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Advantages of prepaid over contract: has common sense left the building?
Contracts are great for service providers, not so much for customers. Contracts come with bells and whistles that seem almost too good to be true. You have to ask yourself, what's in it for the service providers?
The disadvantages of contracts
You end up paying more than you need to. Let's look at some numbers using the Samsung Galaxy S4 as a random example. At the time of writing this, more than one of the major service providers is offering this phone on a two year contract for around R389 per month. R389 x 24 months works out to R9336. You can buy a Samsung Galaxy S4 for R6000 cash. That's an extra R3336! Never mind the bank charges and potential surprises that might be thrown in over the course of your two year contract. The savings can be even more significant if you find one on special, or if you buy the phone second hand.
The hardcore contract supporters will argue that you might get 'free minutes' or some other such deal sweetener; but you have to consider if you would have used that amount of talk time, data or free sms's anyway? And what rates are you really paying?
The devil is in the details and in a contract protecting yourself means scrutinizing the fine print. For example, your data may be insanely cheap on this new contract deal, but as soon as your contract expires you might be quietly switched to a more expensive plan, without warning. There are just too many unsatisfied contract customers with similar stories. And they struggle to get their money refunded once a mistake is exposed.
And, heaven help you if you fall on some hard times and struggle to keep up with payments. Then it's lawyers and blacklisting and a disaster that's hard to shake off. Worst of all, you are locked into this relationship and it will take perseverance and even more money to get out of.
The advantages of prepaid phones
- You control how much you spend: I don't like to get carried away catching up with someone and only later realizing that the conversation cost me a fortune. With prepaid I know when I've gabbed too long as my airtime runs out (and warns me with enough time for goodbyes). If I want to spend more I do, if I can't afford it, I simply spend less.
- No unnecessary upgrades: I take good care of my phones, I'm not too concerned with having the latest phone, I really don't need a new phone as often as a contract would have me believe.
- Flexibility to shop around: If someone has a better deal I am free to switch providers. If my own provider has a cheaper plan that suits my needs, I am free to change it.
- No hidden costs: Prepaid means no surprises for me! I get what I pay for and I don't pay for extras.

The advantages of prepaid electricity

It isn't only cellphones that are better prepaid. If you've ever been on the receiving end of a surprisingly mammoth electric bill you will appreciate the beauty of prepaid electricity meter. With prepaid electricity you can keep a close eye on your electricity expense and adjust your usage accordingly. According to Eskom, prepaid electricity works out cheaper if you use only a little electricity each month. This is because contract customers are charged a baseline fee in addition to their usage. The most significant benefit of prepaid electricity? Never falling victim to another Eskom “estimate” again. And no pesky meter readings to call in either.
Prepaid means less chance of a nasty surprise bill, whether it be for electricity and cellphones. I am quite happy knowing exactly how much airtime and electricity expense I am willing to pay and sticking to it.