With the rise of the smartphone, cap plans have become indispensible. Rather than containing only a certain number of calls and text messages, cap plans now include data for mobile internet usage, social networking features, news, and more. Smartphones, by expanding the features available on cap plans, have given us a lot more choice in exactly what we want to be able to use our phone for. But cap plans aren't just for the smartphone user – they're great for all phones.

The basics

"Cap plan" is a term that gets thrown around a lot, but it might seem a little confusing at first. Here's the basic way cap plans work:

1. You pay a certain amount of money per month to your mobile provider, ranging between $10 and $60 depending upon the provider and the plan.
2. In return, your mobile provider gives you a certain amount of credit for calls and text messages and a certain amount of data. For example, you might pay Dodo $19.90 a month for the Flexi Mobile Plan. You would receive $200 included credit to call and text standard Australian numbers and 1GB of data.
3. Most cap plans will also include some unmetered access to social networking sites like FaceBook, LinkedIn, Twitter, and Ebay among others.
4. It's possible to buy a handset through a cap plan, paying some extra handset fees each month and getting a brand new phone at the beginning to use with your plan.

Like all things, cap plans come with some advantages and disadvantages. Let's run through them and look into the problems you might face with a cap plan, or the details that might win you over to them.

Pros

1. A small monthly fee buys you some great value. If you're a heavy user, it's a much cheaper option than paying for each and every call you make.
2. Getting a handset at a reduced price or even free. Mobile providers like to reward you for signing up with them. Buying the new iPhone outright might not be in your budget, but paying an extra $10 for it every month on your plan might work out well for you. Some providers will even offer new phones for free on their higher cap plans – such as Optus's $59 Cap Plan with the brand new Nokia Lumia 800.
3. The data usage. With some exceptions, you're more likely to get a higher data plan for less money on a cap plan.

Cons

1. Long contracts. In order to provide you with their best plans, most providers will ask you to go on a 24 month contract. 12 month contracts are much less frequent than they are with broadband, though some providers, such as Vodafone, do offer them.
2. Hidden fees. That amount of monthly credit might seem like enough. But you'll need to be very careful not to go over your call and text message credit or your data limit, because most providers will charge exorbitant rates once you go over your limit. It can result in bill shock and unhappiness about a provider you could be stuck with for another three months!
3. Misconception around unlimited plans. There's been backlash in the industry lately over providers offering 'unlimited' call and text message plans and then hiding exceptions in the small print. Make sure that you read everything about the plan carefully and thoroughly. If you're looking for an unlimited plan that covers 13/1800 numbers, for example, we recommend Amaysim's Unlimited PostPaid SIM plan.

Before you sign up...

Make sure to check the coverage in your area of the provider you're considering signing up with. A plan might seem great, but if you sign up with it only to find that you can't get any reception to make any calls where you live, it's going to be a frustrating and useless 24 months.

Decide whether or not you want a phone with your plan. It's definitely one of the advantages of a cap plan that you can buy a handset with it, but it may not be the right choice for you. Buying a phone online outright has its own set of advantages and disadvantages.

Compare and contrast! Use Compare Mobile Plan's cap plan filter search to look at the plans that might suit you and find the best one based on price, coverage in your area, and provider.

Or call Compare Mobile Plans on 1300 850 518 to speak to one of our friendly staff and get help finding the right plan for you.