The booming market for prepaid smartphones: Are the devices worthy?

Prepaid smartphones are shedding their image as bottom-of-the-barrel options — after all, they can actually save consumers a lot of money

A woman shops at a Verizon store: Prepaid phones made up 29 percent of smartphone sales in 2011, up 5 percent from three years ago.
(Image credit: Spencer Platt/Getty Images)

The smartphone industry generally revolves around the latest cutting-edge wizardry rolling off the assembly lines at Apple and Samsung. But a new report shows that the market for prepaid smartphones, which come with fewer functions than their glitzier cousins, is "booming." Prepaid models accounted for 29 percent of smartphone sales in 2011, up from 5 percent a mere three years ago, according to market researcher the Stevenson Company. And bucking conventional wisdom, the report found that income levels and credit scores are no longer "the sharp dividing lines between prepaid and postpaid." Are prepaid smartphones worth another look?

Absolutely. Especially if you don't want to sign a contract: The "typical" smartphone contract costs $70 to $80 a month on the low end, whereas a decent prepaid smartphone will cost you $25 to $30, says J.R. Raphael at Computerworld. That's perfect for those who want core functions like email and messaging, but are reluctant to get locked into a two-year contract. With prepaid, you'll never be hit with "add-on fees and overage charges ('ways they screw you over,' to use the technical term)." You might not be able to get a "top-of-the-line device" with prepaid, but you'll find "plenty of decent midrange smartphones."

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