For a long time, mobile plans have come in two flavours: cap or prepaid. The prepaid plans offer you the chance to buy a limited amount of credit which you can use up, at which point you will be cut off; cap plans offer a great amount of value for your monthly payments, usually include some mobile internet data, and often come on twenty-four month contracts with free (or monthly fee instalments) phones. The common denominator between the two? High call charges.

However, recently a new type of plan has been seen within the Australian marketplace: Pay As You Go (PAYG) plans, where you pay for each and every call and text you make, like a prepaid plan, but with very low call charges and no limit where you will suddenly be cut off until you top up your account. It's a great plan for customers who want low call charges and the ability to completely control their bill, and with providers like Amaysim offering calls at prices as low as 6c per minute, some people are questioning how cap plans can possibly stand up.

Who has the power, you or your telco?

There's a lot of ways to compare the benefits of a cap plan versus a PAYG plan. Let's take a look at the common features of both to see if there is one clear winner, and if not, which plans can suit which customers.

Call charges

Most providers have a range of different call charges for different types of plans. We'll be comparing plans that 1) include phones, if possible and 2) are most similar to each other – that means we'll be going for the standard cap plans, rather than ones that are sold specifically because of low rates (e.g. Virgin's Big Plans, which are skewed towards someone who prefers calling to texting).

We'll look at two minute calls, the average length of calls made in Australia, and include the cost of any flag fall fees. Here's a list of some of Australia's biggest telcos, and how they match up to each other.



To begin with, these call charges look very obvious. Amaysim clearly come out on top, with a call length that's often $2 cheaper than other major retailers. However, it's important to look at more than just the initial figures, studying the actual context of that call cost.

Amaysim are PAYG. Let's say that you spent $10 on your PAYG account; that would give you, at 24cents per two minutes, approximately 42 minutes of talking, which is nothing to sneer at.

However, the way the cap system works is totally different. Vodafone's $49 Cap gives you, for your $49 per month, $550 worth of credit. That means that the ratio of the dollars you get to the dollars you pay is around 11:1. Which means that in fact, with Vodafone, the cost of every two minute call is not around $2.36, but usually around 21.5cents.

As well as this, it's important to take into consideration free voicemail and unlimited free calls on the same network, which some providers factor into their plans as a matter of course, and which can help save majorly.

However: the lower call costs are only until you get to the $550 capped value. The moment you go over that, it goes back to a 1:1 value, which is when bill shock kicks in.

Amaysim, on the other hand, remain at a 1:1 value the whole time, and the cost of their calls is therefore always going to be significantly lower. That means that if you don't make as many calls in one month, you will save in the same way that you save compared to Vodafone once if you go over the amount of calls you would usually make in a month.

So who's the winner in terms of call costs? If you're a heavy user, $50 for $550 worth of credit might stretch a bit longer than Amaysim's PAYG rates. However, the saving you make with cap plans would not be that substantial, and once you go over, you could take a massive hit in terms of excess usage charges. Amaysim is a safe and practical bet.

Contract length

Here, undoubtedly, is where Amaysim shines. Not only do they offer 0-month contracts, they refuse to offer longer contracts, stating that "locking people in" is contrary to their company values. In contrast, while you do get the occasional SIM-only cap plan on a 0 month contract, most mobile providers put cap plans firmly on the 24 month contract, except for Vodafone, who also have 12 month options.

Here at Compare Mobile Plans, we're big fans of avoiding contracts when possible. It means you won't get locked into a plan that turns out to be unsuitable, whether because of the amount of credit you're getting or because the network isn't good enough in your area. However, because most providers are selling you a phone along with your monthly cap plan, they cannot afford to give it to you on a 0-month contract.

That means that if you're happy with the phone you already have or you wish to buy a phone outright, going through Amaysim to get a PAYG plan is a great choice. You'll have complete control over your plan and your contract length, and if it turns out it's unsuitable for your use, you'll have an easy option to leave – but we doubt you'll run up against that issue!

It's worth noting that Vodafone also have recently established the Vodafone Guarantee, a new policy that guarantees good coverage. If you find that your Vodafone plan simply does not provide adequate coverage in your area within the first month, you can return the handset and leave the contract easily, keeping you from being locked into a plan that doesn't work even if you did sign up to a 24 month contract.

Hardware

There is one main disadvantage to PAYG plans and their 0-month contract and this is the fact that, because of how they're structured, it's simply not feasible for the provider to give or sell you a mobile phone at a discount.

This is in direct contrast to most cap plans, where you can get the best handsets for only a very small added extra charge per month – or often, no charge at all! If you're looking for some of the best new phones, like the HTC One X, the Samsung Galaxy Note, or an old and beloved favourite, the iPhone 4S 16GB, and can't afford or don't want to buy the phone outright, getting it on a plan is the best way to set yourself up with some new technology.

So, what should you pick?

If you're after a very heavy plan, you might want to go a cap plan – they can sometimes offer more value for your dollar (although there's also the Amaysim Unlimited Plan to consider). Similarly, if you want to get a brand new phone or tablet, going on a cap plan is a lengthy but ultimately thrifty way to get and enjoy your new phone.

However, for all other users, we'd recommend Amaysim's PAYG Plans. They offer better value for money, more control over your plan and contract, and no hidden fees whatsoever.

To get started with a PAYG Plan, call Amaysim today on 1300 791 895.

Or if a cap plan is more your style, call one of the best and fairest cap plan providers:

Optus: 1300 302 412
Dodo: 1300 301 550
Vodafone: 1300 850 518

If you have any further questions about how cap plans or PAYG plans work, or if you want advice working out what your own mobile usage would most need, please don't hesitate to give us a call on 1300 850 518 and we'll be able to answer any questions you might have.

You can also check out Amaysim broadband plans if you would like to connect your laptop or iPad with Amaysim.