As our dependence on mobile phones has increased, so too has the level of infiltration of mobile lingo in Australia. Most people know – or think they know – exactly what every possible new keyword means: cap plans, excess usage charges, prepaid and postpaid, mobile data.

Know what you want? Click here for the best cap plans.

As a result, though, if you're going wading into the mobile market for the first time – whether because you're a young adult who's never paid for your own plan before, or a pensioner who's sick of prepaid feature phones – there can be a lot of confusion about what everything means, and what you need. And even if you think you're on top of everything, you might be harbouring some common misconceptions that are stopping you from getting the best possible deal, or that might even result in you getting slammed with bill shock.

It's back to basics today at Compare Mobile Plans. We're going to run through some of the most common terms used in mobile plans, and the hidden implications you need to look out for.

Cap plans vs. Prepaid plans

Different plans work for different people, and different types of plans are equally important to consider. Let's take a look at the—

Ideal Cap Plan Customer

You're a heavy user who relies on a mobile phone more than a landline – even if most of your use on it is texting. You like the idea of being able to go on the internet on your phone, but most importantly you want a new phone, and you don't want to have to buy one outright. You don't mind going on a 24 month contract – the most important thing to you is getting that new iPhone as cheap as you can!

Ideal Prepaid Plan Customer

You have a phone that you're happy with, and you're not interested in upgrading – if you are, you'll buy it outright yourself. You're probably a light user, but even if you use your phone quite often, the most important thing to you is having complete control over your bill. You don't need or want to go on the internet on your phone, and you don't want a contract.

Click here for the best prepaid plans.

So how do these two different kinds of plans work?

Basically, cap plans put you on a contract, and you get a few goodies out of that. They'll give you a capped (hence the name) amount of credit every month that you can use on your phone – anything from $50 to $1000 (and some cap plans offer unlimited calls and texts). They'll also give you some data that you can use to access the internet on your phone – again, anything from 100MB to 5GB. You can also get a mobile phone on your cap plan – depending upon which phone you get, you may also need to pay additional handset charges each month (from $3 to $20, depending upon the phone and the length of the contract).

If you go over those capped amounts they give you, you'll get hit with excess usage charges. For any calls you make, this means the price they're charged at (often around 90c per minute). For your internet data, this can be much more expensive – between 5 and 25c per MB is standard (which can add up to $50 to $250 per GB).

A prepaid plan, on the other hand, allows you a little more freedom in choosing what kind of payment you'll need. Some providers offer you a "dollar to dollar" deal, where what you pay is what you get in terms of credit (call charges are usually pretty cheap). Other plans may still offer included value within your prepaid plan, like Virgin's Prepaid Your Cap Recharge. You can't run into excess usage charges on a prepaid plan; if you use up all of your credit allowance, your provider will simply block you from making any calls or sending any text messages until you top it up again. Keep in mind that this is often different when it comes to data usage – read the fine print carefully and don't expect them to just stop you from accessing the internet when you've used it all.

For both cap and prepaid plans, there are important factors to consider:

1. Call charges. That $750 credit allowance might seem generous, but make sure that the call charges are relatively low – if they're 99c per minute and you're a heavy caller, you'd be surprised at how quickly you can rip through them.
2. Expiry dates. Prepaid call credit usually comes with an expiry date attached, which can be really annoying; having to keep an eye both on how much credit you have and when it's going to expire is draining, and you don't want to waste that last $20 just because you don't use it in time. Pick plans that have long expiry dates, is our advice!
3. Excess usage charges. This is something to keep in mind particularly when it comes to looking at your mobile data plan. Most providers these days keep their excess usage charges under 25c per MB at most, but that can still get you hit with a nasty shock at the end of the month if you go over by even 1GB. Monitor your usage closely by logging into your account online or setting up usage alerts through your provider, and try and pick a provider who only has low excess usage charges.

Feel like you're stuck in the middle between these two choices?

There is another option. Does this sound like you?

You have a phone that you're happy with, but you're too heavy a user to find a prepaid plan that suits you. You like to use the internet a lot and you make a lot of calls, but you want to avoid a contract and maintain as much control over your bill as possible.

You should consider one of the two best SIM-only plans.

Dodo offers the Prepaid Unlimited Plan for $39.90 per month. This includes unlimited texts and calls (including 13 and 1800 numbers) along with 5GB of data, and 100 free international minutes for certain countries. This plan is available on a 0-month contract. Call Dodo on 1300 213 295.

Amaysim offers a similar Prepaid or Postpaid Unlimited Plan for $39.90 per month. This includes unlimited texts and calls (including 13 and 1800 numbers) along with 4GB of data. Amaysim are famed for their friendly Australian based customer service. Call them on 1300 667 950.



Want help finding a phone? If you'd like to talk to us at Compare Mobile Plans about what phone and plan would suit you, feel free to give us a call on 1300 850 518.

Or take a look at some of Australia's favourite smartphones: the Apple iPhone 4S 16GB, the Nokia Lumia 800, or, to try something different, the brand new Samsung Galaxy Note.