There are two types of generally available phone plans: pre-paid and post-paid. As the names suggest, the pre-paid plans are paid for up-front, purchasing credits before you can start using the plan, while for post-paid plans you will receive a monthly bill.
With a pre-paid plan you can keep track of your bill and know exactly how much you are spending each month. When you ‘recharge’ at the end of the monthly period, you can decide to spend more … or less, depending on your needs. There are no excess usage charges that can occur and besides no risk of overspending, these plans do not lock you into a contract; you can decide to change plan at any time. With a pre-paid plan, however, you do need to have a phone and, when your monthly credits expire, remember you will need to recharge again to continue using the service.
Post-paid plans work differently. Although you won’t be billed till the end of the first month, bills will include a minimum service charge and any excess usage charges – once you have used up your monthly allowance, you will be billed for every extra text, call or data usage. Some post-paid plans allow you to cap your bill by nominating a maximum monthly spend. You are locked in and cancellation fees may apply if you wish to exit the contract. With a post-paid plan you can choose to purchase a new phone as part of the plan and you don’t need to top-up credit at the end of the monthly period.