In this article, we shall discuss the good and bad points of each type of arrangement, in order to help you decide.

Prepaid plans, also commonly referred to as pay as you go plans, are so called because you have to buy phone credits before you can use your phone for outgoing calls or texts. This type of set up has a number of advantages. If you get a prepaid phone, you never have to face a huge phone bill, or indeed any type of bill, at the end of the month.

You usually have to pay a bit more up front to get a pay as you go phone, but they can work out to be cheaper in the long run if you are not a heavy phone user. Another advantage of prepaid plans is that, because you are not tied into a contract, you are free to walk away at any time.

The call costs are typically higher with a prepaid phone, and you could be left unable to make calls or send texts if you run out of credit and are unable to purchase more credit for one reason or another.

Monthly contracts usually involve far less in the way of initial outlay, allowing you to get a far more expensive phone than you might otherwise be able to afford. The calls and texts are usually cheaper, and if you are using your phone a lot, this type of deal is usually a lot better value.

With a contract, you can use your phone as much as you like without incurring any restrictions, although this can be a double edged sword, as you might end up with a huge bill if you are not careful.

When all is said and done, a contract phone is generally a better option if you have a regular income, some self discipline, and plan to use your phone quite frequently. However, if you only intend to use your phone occasionally, or are on a low income, then you should probably go for a pay as you go deal instead.