Whether you use it simply to call people, or have installed every app imaginable and use them on the regular, there is simply no way to exist anymore without a portable phone of some sort. In some cases, you obtain phone service by signing a contract with one of the big phone companies, good for a set period of time, and a set amount of money each month.
Signing a contract will all but guarantee you access to the best and newest technology available, far earlier than someone who doesn’t sign a contact. In addition, you’re locked in to the rate you signed up for, and the phone company cannot alter that mid-contract. Also, though cell phone reception as a whole gets better and better all the time, there are still areas where reception can be less-than-perfect.
Pay-as-you-go phones have many advantages, with the best probably being the pure freedom you have. In addition, pay-as-you-go technology, despite still being behind, is oftentimes almost as good as contract phone technology. However, keep in mind that a cell phone contract is still a legally binding contract, just like one you would sign in a court of law. Finally, unless you have read all of the Terms and Conditions, and track everything you do on your phone, expect to get hit with random fees and unknown charges more than once. In addition, while pay-as-you-go technology is catching up with contract phones, you still have fewer options and models to choose from, and you’re still second-in-line for top technology. The choice of whether to sign a long-term contract for a phone, or to simply pay each month to keep your service on, is a shockingly complicated one. As such, tons of different companies have popped up, each one with a variety of plans to provide you service for a fee.
However, in recent years, a second type of service has gained in popularity: the pay-as-you-go phone.

Also, as part of the contract, you will almost certainly receive your phone at a deep discount. Unless they somehow get you to renegotiate, your rates should not change for the duration of the contract. If you’re in such an area, and you’re on a contract phone, you are considered first priority. You can get smartphones now without a contract, many of which function just as well as the kind you would get on a contract. Most plans are cheaper without a contract; for example, a $100-per-month contract might net you unlimited talk and text, but you could easily get that for $50 or less on a pay-as-you-go phone.
Once you’re in, you’re in, and good luck getting out of it if you don’t like where things are going.
If your credit score is bad, you might be forced to make a big down payment, or could be turned down completely.
Usually, this manifests itself in the form of roaming charges or data fees (such as posting on social media too much.) These charges can add up fast, and result in a bill way higher than what you might have expected.
If you purchase one that doesn’t specify the number of minutes and texts that you get, you might be in trouble. So, if you want the latest and hottest machine that was just released yesterday, your only hope is to sign a contract, because that hot new machine won’t be available in non-contract form for quite a while. It’s not just a question of “do I have the money?” It’s also a question of existing credit, what you’re looking to use the phone for, how up-to-date you want to be with the newest and hottest technology, and how committed you are to staying with the same company for years at a time. This model allows you to pay for new service every month, and cancel anytime, simply by not renewing.
Where you might pay $400 or higher for a top-of-the-line phone off the shelves, you could pay $100 or less as part of a deal.

If prices go up, or minutes go down, you are not affected until it’s time for a new contract. You are therefore likely to get better, and more consistent, reception than those on pay-as-you-go phones might. You might not be able to play games or chat on it but, if all you need is something cheap and basic, there’s no reason not to go this route.
Most phone companies require at least two years of commitment, and will charge a hefty fine if you opt out early. And, unfortunately, making timely payments on a cell phone contract does absolutely nothing to build your credit, as phone companies usually do not report good payments to the credit agencies.
If your goal is simply to buy a cheap phone, then you can easily find one for $100 or under. This fine can be over $300 if you have a smartphone, effectively recuperating the cost of the phone that they ate when they gave you the discount for signing a contract.
They will, however, report late payments, which can harm your credit score and make it harder to get another contract in the future. In other cases (even when the plan specifies how many minutes you get per month) you pay a lot for a little, such as $50 for 400 minutes.
However, if you want to get the best possible contract-free smartphone out there, be prepared to shell out at least $300-$400, without any free minutes attached. And that’s only for calls; you still get charged a certain amount for each text you send or receive.

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