Is a Prepaid iPhone a Good Idea?

This entry was posted by on Monday, 17 September, 2012 at

Up until recently, the only way to get an iPhone on a prepaid plan was to “bring your own device” and live with it being unsupported. That approach had many pitfalls, like making sure that the phone was matched to the carriers network (GSM vs CDMA), getting the iPhone unlocked, and issues with compatibility of the applications with the carriers network.

There’s now a new option, from Virgin Mobile, that makes getting a prepaid iPhone more straightforward.   There are some upfront charges to contend with, but you may be able to reduce the cost with a Virgin mobile promo code.  Here’s how it works…

Virgin Mobile, the partner that Sprint uses as a  pre-paid provider, just unveiled their prepaid iPhones. Their contract works this way: You pay a higher initial price for the iPhone 4, since it’s not subsidized by the plan, and then, you spend about $30 per month for unlimited text messages,data and a basic allotment of 300 minutes. For $10 more per month, you  get 1,200 minutes, and finally, a $50 rate bumps you up to unlimited talk.  If you like to use your phone as a mobile wifi hotspot, it’s an additional $15 per month.

Sounds good so far, right?  Are you wondering what the catch is?  The catch is that the handset cost is pretty high.  We’re all used to carriers like AT&T and Sprint offering us an iPhone for $200 or so.   Well, the only reason they can do that is because you have to commit to a 2 year contact to get the pricing.   The phone is costing them well over $200, so they make up the loss with what they charge you over two years.   And boy, do they charge you.  Not just what’s in the contract, but a plethora of overages, undocumented fees, etc.

Now, enter Virgin, who have little ability to recoup money from you on a prepaid plan.  If you opt for that $50/month plan where everything is unlimited, that’s all you pay, ever.   So, the tradeoff ends up being the upfront price.   It’s $649 if you want the 16GB model or $549 if the 8GB phone will do.   If you’re suffering from sticker shock, do the math.   An excellent article from the Christian Science monitor does the math for you, and says you’ll save about $750 over a two year time period.


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