Canada Phone Plans: Difference Between Prepaid & Postpaid?

Have you ever wondered why there are two different phone plans? Well, Prepaid and Postpaid services both provide unique benefits to their users. While most people today prefer contract-based mobile plans, on the other hand, prepaid services are pretty popular as well. 

Prepaid and postpaid phone plans are two common strategies. A prepaid connection is one for which you are charged before you use your phone’s services. Alternatively, postpaid plans require payment only when services are utilized.

This guide gives you a clearer picture of prepaid and postpaid plans and points out their bright and gray spots so you can use them efficiently. 

If you’re searching for a phone plan that fits you the best, and you want to explore credit checks and how to improve your credit while living in Canada, we recommend you to keep reading.

Defining Prepaid Phone Plans

Most people desire to stay structured by managing their expenses. But they miss that their cell phones consume the most unnecessary money. 

Sometimes you use cellular services to pass your leisure time without realizing that this slight modification in the phone plan can lead to better expense optimization and supervision. If you are among them, the ideal option is to go with a prepaid plan if you want to shrink the amount of money you spend each month.

 You will prepay for the amount of data included in your program. After you have gotten that limit, your service will be automatically paused until you want to reactivate it later, saving you cash.

Nobody would adopt a service without getting to know its hurdles along with its even considerations. Of course, everything has a tradeoff. Therefore, plenty of features are in favour and against the prepaid plan. The most widely captured among all are converse underneath.

Advantages of Prepaid Phone Plans

Even though there are a lot of other resources available to you, if you are interested in making the switch to a prepaid phone plan alternative, we will concentrate on the features of switching that are the most evident and beneficial to you.

Flexibility to Switch

Prepaid phone plans have the added benefit of adaptability, which means you are always free to shift to another service. Most agreements between parties endure for two years. In search of better service or lower costs, you may be required to pay a termination fee or buy out your present arrangement.

Early termination of the contract is usually not an option due to the prohibitive cost of this penalty. You can change your cellular service provider at any time. If a costly agreement has ever bound you, you’ll understand the value of this freedom.

 Reduced Monthly Fee

Prepaid choices are often less expensive than contract plans. A prepaid plan enables you to only pay for the minutes you use. If you prefer to converse merely via SMS, you can do so. There are unlimited talk time and data transmission options if you require them.

Although there are exceptions to the rule, contract plans often have higher monthly costs than prepaid plans. Since activation fees are not required for many prepaid plans, the price of the initial month of service will typically be lower than it would be otherwise.

Easy Bill Payments

Regarding billing and payment choices, prepaid mobile broadband services offer a significantly more comprehensive range of alternatives like scratch cards, debit or credit cards, and payments made in person at the applicable sales and service center. 

Payments made using mobile applications are also choices for settling past-due financial commitments. A transaction fee is usually not required, though some businesses may charge for phone or express payments.

Drawbacks of Prepaid Phone Plans

It’s crucial to look at these because there might be a service that is on top priority for you, but this plan fails to address that. Even though a prepaid plan is a highly reasonable offer, there are still a few drawbacks to consider. A limited selection is mentioned below.

Global Constraints

Since many prepaid phone plans utilize existing cellular networks to provide service, they are not always ideal for international travel. Some prepaid phone providers have recently added roaming capabilities, making saving money easier for vacationing prepaid users.

If you frequently travel for business and are interested in international prepaid phone plans, you have come to the right place. Before switching to a prepaid phone plan, consider your alternatives if you have upcoming travel plans.

Throughput Choking

The network provider’s link is overloaded with traffic and will reduce data transfer rates. However, if you are contemplating switching to a prepaid phone plan, be aware that you may experience slower data transfer speeds.

As prepaid cell phone plans frequently utilize major cellular networks, their customers are not given priority when it comes to maintaining data speed. Many prepaid plans offer access to 5G and 4G LTE speeds, but only up to a predetermined limit before data throttling kicks in.

Equipment Up-Front Fee

The price of hardware is typically included in the contract’s regular payment. Prepaid plans are more expensive for consumers on a tight budget because they need to purchase a phone in addition to the monthly service charge.

Most prepaid service providers will let you use your phone if it works with their monthly plan. So many people think the easiest method to switch is to wait until their current contract is up and then get a prepaid phone.

Defining Postpaid Phone Plans

Contracts for postpaid mobile phones typically require a monthly fee that will continue operating even after you hit your plan limits. Based on the terms of your plan, additional fees may be added to your next bill, but there’s no interruption to your service.

Because there are more SIM-only plan options, they are often a better deal than plans that come with a phone. If you can afford it, you must bring your phone or buy a new one for a SIM-only program. On a postpaid plan, data is reset at the end of the billing month.

Some programs require a minimum commitment of 12 or 24 months. All these plans include unlimited call and text, which means you’re essentially paying for postpaid unlimited data plans and perks. Furthermore, depending on your provider, you may be charged automatically for any data consumed more than your monthly allocation.

Advantages of Postpaid Phone Plans

Although numerous resources are available to help you move to a postpaid phone plan, we will emphasize the process’s most salient and helpful parts. Just keep in mind the benefits outlined below to help you decide. These points can also help you prevent misunderstandings.

Free of Balance and Recharge Issues

 The postpaid plan’s top service that attracts customers is the customer does not have to get the recharge done frequently. Life’s very unpredictable, and you can face any unwanted circumstance where you must contact someone in an emergency—a matter where you do not care about anything else but communication.

Low credit would no longer be a concern on your worry list. Postpaid plans are also quite reasonable for those who feel lazy to recharge their cell phones regularly. Beyond that, you’ll no longer worry about refilling vouchers. Subscriptions are monthly. Thus, you can satisfy your monthly communication needs.

Better Connections with your Network Service Provider

Signing a postpaid billing contract with your Internet service provider (ISP) can get you a lower monthly phone rate. One cannot compare an equivalent category of general customers to the others. Discounts of up to 70% are often available from most ISPs.

Customers who choose to do business with them in this manner enter into a legally binding, long-term, and indefinitely prolonged agreement. That means you must use their services for a previously agreed-upon time.

Add-ons and Extras

 There are a lot of different prepaid cell phone plans available, and many of them contain additional features and perks for subscribers. The add-ons include subscriptions to gold and diamond packages that offer customers free local and international minutes, internet packages, etc.

There is a wide selection of service providers from which to choose, and some even offer free unlimited services such as cloud photo storage, mobile hotspots, and live video streaming to their customers. It is not the case with the vast majority of prepaid phone providers.

Drawbacks of Postpaid Phone Plans

Postpaid phones give users access to various services and incredible versatility. However, to make progress, you will need to make certain sacrifices. A few components of the postpaid package that have not been successfully covered are explored further in this section.

Costly

One significant disadvantage of postpaid packages, particularly unlimited plans, is that they may have significantly higher monthly costs. The primary reason why most individuals avoid using postpaid services is expensive rates.

The postpaid plan is more expensive because the services are more robust and provide the user with a higher data transfer rate and other benefits.

Data Deprioritization

Another noticeable drawback is when the network is congested, a network service provider temporarily slows down the internet speeds of some customers to create a place for those who have used less data that month.

This hurdle may cause trouble if you want to use the carrier for an urgent cause. Those customers that have met the monthly data deprioritization threshold are often deprioritized. This limit varies by carrier and plan.

Untouched Data Plan

The collected statistical evidence indicates that in some instances, the consumers are not utilizing much data and are merely consuming a limited bond within their postpaid contracts. It can leave untouched cellular services. 

These users probably would be better off with the restricted plan offered by prepaid, given that they never reach the data limit. Hence, this is a disadvantage for them as they are paying more in the form of subscriptions and gaining less.

Difference Between Prepaid and Contract Phone Plans

When compared side by side, prepaid and postpaid phone plans differ significantly. Let’s evaluate them based on a few key characteristics. Also, we shall attempt to comprehend the gains and losses of both phone packages to you. A few of the crucial parameters are mentioned below.

Basic Idea

The fundamental goal of prepaid phone plans is to pay for and then enjoy the services. In contrast, the Postpaid payment method allows you to utilize almost endless services and pay for them all at once.

Connectivity Interval

Prepaid period charges on a real-time basis, and the duration might range from one day to one year, depending on the amount of prepayment made. On the other hand, Contract Plans typically last one month but can be customized according to your wish.

Transaction History

Prepaid planning considers it vague to monitor the credit history because the expense has already been paid. In Contract plans, each dial must be captured in the record, as you must pay for everything after the contract duration ends.

Invoice Issuance

In prepayment, no bill or invoice is issued to the user. You recharge and utilize the paid services. In contrast, you receive a detailed statement at the end of your monthly billing cycle that details your data usage during the period.

Extra Privileges

If you prepay for services, you will not receive additional perks unless you perform a premium prepaid recharge. However, even the most affordable postpaid mobile plans include other perks such as free data connection and minutes facility. 

Prepaid vs Postpaid Phone Plans: Which Is Best For You?

Since there is no universally accepted method for selecting between the two, answering this question is definitively difficult. We will, however, aid you in determining which option is ideal for you based on your needs and preferences. Let us take a broader view of these amazing plans through a different lens.

Best for Prepaid Plans

Prepaid services are perfect for you if you always want to be aware of your spending, seek a cheap phone plan since you don’t use it much, or both. Prepaid Plans allow you to use your phone’s services inside a constrained area with fewer benefits and services.

However, there is no bother with shocking bills at the end of the month, so you do not need to make savings for a predetermined amount. You are aware of your edges and bounds. Consider switching to a prepaid plan if you find these characteristics appealing.

Best for Postpaid Plans

Postpaid cell phone plans usually have a higher monthly fee, but if you observe it the other way around, they typically come with better Internet speeds, faster texting, and other perks. Postpaid services are great for families or large groups of people who all need to use the same calling plan.

They have a group of phone lines that all go to the same billing account and share costs with the assistance of invoice history. This way, you can make the most of what this plan offers. If this sounds like your situation, go for a Contract Plan.

Differentiating Prepaid Recharge and Postpaid Recharge

Let’s examine each feature added to or coordinated with any phone plans since the two programs have significant differences and similarities. In making this comparison, the following aspects have been taken into account:

Duration

Postpaid plans are designed to last longer than prepaid ones. You have several prepaid options valid for a month, and postpaid strategies are charged once every 30 days. 

Moreover, in addition to monthly plans, prepaid connections are also available for daily, weekly, monthly, quarterly, and yearly goals. Therefore, there is no question that prepaid will win the first round because it gives customers more options and flexibility.

Customer Care Services

Another tried-and-true service is the VIP service. You will receive a faster and more thorough response to your complaints if you are on a Postpaid cellular network contract and need to get in touch with your network’s customer service.

On the other hand, if you have prepaid service, you may experience long hold times on calls from customer service and long lines at the branch. Therefore, this round belongs to postpaid customers treated like VIPs regarding customer service.

Your Connection’s Recharge

With prepaid plans, you must first recharge your account to access it. While being charged at the end of every month, postpaid programs promote you as a customer or a user to comfortably make phone calls, send messages, and so forth.

You can choose between various prices with various additions when recharging on prepaid plans, and you can switch which recharge option you use each time you top up. You won’t be able to reaccess these services until you replenish your credit when your purchased package eventually runs out.

Plan Changes for Tariffs

If you are on a prepaid package, you can rapidly shift to another tariff plan by following simple instructions. On the other hand, subscribers to postpaid plans are not given this offer; they must change plans or adjust, which is not as easy or quick as the former.

For instance, all you must do to alter your prepaid plan is to have the appropriate recharge completed. On the other hand, you must first contact a customer care representative if you want to modify your postpaid plan.

They’ll need a considerable amount of your data. You must wait until the end of the current billing cycle before the new plan is activated after the program has been changed. That’s a lot, for sure! Prepaid plans win this round because they offer greater ease and simplicity.

Price and Payment Efficiency

Prepaid cell network services are significantly cheaper than Postpaid plans. Still, customers should be aware of their plan’s expiration date because they can easily recharge their mobile phone sim card anytime.

Although slightly more costly than Prepaid plans, Postpaid plans are more popular and offer more benefits to users. Postpaid packages are difficult to cancel and have no expiration date. If you don’t pay your bills on time at the end of each month, your telecom will slightly extend the time.

It’s crucial to remember that since postpaid plans are monthly, you won’t ever need to worry about forgetting to recharge or running out of data or Talk time in the late hours of the night. This round can be viewed as a tie because prepaid and postpaid have their share of advantages.

Invoice

You might be unsure which plan will work best when billing for your business. Prepaid accounts may not be acceptable proof because they don’t provide an official bill or invoice.

Postpaid plans, in contrast, include a proper and legal bill. If you choose a postpaid service, you can receive monthly bills. Whether it is delivered via email or written on paper, you will use that as billing evidence. Telecom bills are widely accepted as valid billing documentation by financial institutions.

Plans

Prepaid is charged in real-time according to a predetermined schedule. After you recharge, the appropriate amount is subtracted from your daily cap. The offer is valid after you’ve finished using all the included programs or until it expires.

Assume you chose to subscribe for a week’s worth of 2GB files. Irrespective of how many days are left, you will be charged the daily load if you use it up. Your wallet will feel the effects of this right away. 

You can no longer use its facilities if your allotted amount has been reached. You’ll need to make some other recharge if you intend to keep using the services. Compared to prepaid services, postpaid services are more flexible.

Even though postpaid plans permit you to continue using their services after the data limit, you won’t be surprised when you receive your monthly bill. On the other hand, prepaid plans let you track your usage in real-time and know exactly how much you’re spending at all times.

Establishing a New Connection

The network provider can change your prepaid SIM service and plans anytime. SIM cards are available everywhere, including nearly any store or road. Additionally, you can make purchases at shopping mall entrances. 

You can always get a new card if you want to change your phone number or if you’ve lost your old one. Additionally, switching network providers is simple. You only need to insert your new SIM card into your mobile to start.

On the other hand, if you want to change your plan, upgrade your mobile number, or cancel your postpaid connection, you must make many legal and technical adjustments. As a result, the winner of this round is paid for its ability to adapt.

Use of Data

Most mobile operators offer payment options and data limits for postpaid and prepaid options to ensure that all their customers can afford a plan. However, most postpaid connections provide unlimited data plans, whereas prepaid plans typically have a data cap.

Additionally, if you don’t use all of your data during the allotted time, a postpaid plan will permit you to carry the unused data to the following month. For instance, you will use the remaining 10GB of data next month if you subscribe to a postpaid plan that provides 30GB of data each month but only uses 20GB that month. 

Prepaid plans cannot use this feature; after the validity period has passed, you will lose all remaining data from your bundle. Therefore, is postpaid superior to prepaid? Well, postpaid wins this round without a doubt for greater efficiency.

Network Coverage

When it comes to network coverage, telecom providers used to make no distinction between postpaid and prepaid customers years ago. However, recently, telecom providers have begun offering better and faster speed due to a rise in the number of people purchasing data plans and limitations on network capacity.

As an illustration, Airtel recently unveiled its “Priority of 4G Network” plan for Platinum postpaid customers, enabling them to enjoy even faster 4G speed on their smartphones and other connected devices. Because postpaid customers typically receive better support and service from telecom providers, this round is given to them.

Canadian Credit Checks for Phone Plans

Whether or not you can obtain a favourable credit check is one factor to consider when deciding between a prepaid and postpaid plan. A credit check estimates your capacity for borrowing in Canada.

The payment process is frequently necessary for monthly services because businesses want to ensure their clients can afford their payments on time.

Because you are doubtful of Canadian credit history, it might be difficult to pass a credit check if you are a newcomer to Canada. You might want to choose a prepaid cell phone plan in this situation. 

Furthermore, building your credit history in Canada won’t take long if you follow the proper steps. However, many postpaid plans require credit checks that are not needed for prepaid cell phone plans.

Credit Checks for New Customers Seeking Monthly Contracts

Research shows Virgin, Fido, and Koodo companies provide the most affordable monthly contract phone plans. Fido, Virgin, and Koodo advised new customers to contact them directly to conduct a credit check. 

With no assurance that a newcomer would receive a positive credit check, each company was eager to process these credit checks from newcomers to see if they could be approved for a new monthly phone contract. But! The businesses you spoke with advised recent immigrants to finish the credit check to be sure. 

For new immigrants, some of these businesses have flexible requirements. Koodo offers the New Immigrant Program in certain areas, which enables newcomers to subscribe to specific monthly contract phone plans with little supporting documentation and clean credit history. It was mentioned to us by a Koodo representative.

Additionally, some phone providers will conduct a credit check on international students enrolled in specific provinces using their student visas and foreign identification. The availability of providers varies from region to area, so a lot depends on where the studies are being conducted.

In the end, getting in touch with the business and completing the credit check are the only ways to know if you’ll be approved for a contract. Make sure your documents are prepared.

You will need some identification, though each company may request slightly different paperwork. Often, a Canadian bank account or credit card is sufficient to meet some of these demands.

Plans for Prepaid Phones Without Credit Checks

Prepaid plans are available from all top mobile phone providers. However, Public Mobile and Chatr Mobile have the most affordable prepaid plans. These three businesses don’t offer monthly subscription options; they only provide prepaid plans. 

Another thing to keep in mind is that all prepaid plans bring your device (BYOD) programs by default. It implies that you must already have an unlocked phone to register for a goal. You can buy a phone from the provider, but you’ll need to pay the total price upfront. 

For this reason, prepaid plans might not be the best choice if you want to buy a costly phone model and expect to pay it off over a longer period through a phone contract.

You’re aware that you may wish to use the most recent iPhone available to capture stunning images of your first cheese curds, but this may not be an option unless you have a lot of money to burn. 

In this situation, you should start establishing your credit history in Canada to quickly be accepted for a new phone and a monthly contract.

How To Improve Your Credit in Canada?

If you’re a newcomer to Canada, you should establish your credit history immediately. You can do much more with the help of a high credit score and a strong credit history by just getting a monthly phone contract. If you want to rent an apartment, get a car loan, or get a personal loan, you’ll need a credit history!

Fortunately, you can establish your credit history as soon as you land in Canada by following a few easy steps.

Establish a Bank Account

You’ll need a bank account, including your new phone, to handle your Canadian financial affairs. Pre-authorized payments make it simple and quick to pay your cell phone bill (and several other bills! ), but they can only be set up once you have a bank account.

Opening a Canadian account should be one of your priorities when arriving in Canada. Fortunately, we’ve got you covered. Discover which Canadian banks are offering exclusive deals to recent immigrants.

Acquire a Credit Card (Not Prepaid)

Get a credit card—not a prepaid one—because that is the easiest way to establish your credit history. When you create an account with one of the many Canadian banks, you can take advantage of their newcomer banking programs, which often include a credit card. 

It might be more challenging for newcomers with a temporary visa, such as a work or study permit, than for new permanent residents to get a credit card.

Please be aware that you shouldn’t prepay the perfect credit card because these cards do not significantly affect your credit history.

Pay Off Your Credit Cards on Schedule Each Month   

Given that you have a credit card, you must make regular payments. If you are a newcomer, it is especially crucial. A credit check will be more challenging in the future if there is a history of late payments.

Pay the Full Amount Due

It is preferable to pay off your credit card in full each month, which shows that you are a liable consumer who can be relied on to repay your credit. It might not always be feasible to pay back the total amount, but make sure to make your minimum payment, or your credit score will suffer.

Check Out The Best Cell Phone Plans in Canada in 2022!

FAQs

Final Thoughts

So which type of plan is best for you? Once again, the answer depends on your needs. To determine which plan is better for you, consider how much data and talk minutes you need and how much other features, like roaming minutes and text messages, are worth.

Look at prepaid plans, postpaid plans, and carrier websites to get a good sense of how the prices increase over time.

In this guide, we’ve covered the key questions when selecting a Canadian phone plan and laid out the distinctions between the two, so you can make an educated choice about which one is best for you.