When thinking about the expense of a phone you should first make the decision regarding the payment model you will choose. Typically, there are two models you can choose from, (1) pay as you go and (2) a contract plan. These two models differ in the way that you pay the telecommunications companies quite dramatically.

With a pay as you go phone, you are paying for the phone itself outright and them just paying for the actual cost of ever call you make. To top up you credit you can buy top-up cards over the counter and newsagents, or you can use an automated system that will allow you to charge up credit using your standard credit or debit card. Call costs using a pay as you go phone are usually slightly higher.

A contract plan involves you having an agreement with a telecommunications company like AT&T or Verizon to spend a minimum amount of money every month. Depending on what that minimum fee is, the phone company will subsidize the cost of the phone handset and give you a certain number of minutes of calls and text messages each month included as part of the package. If you use more that your allotted number of minutes or messages, you will be charged an additional fee.

Do not be fooled into thinking a contract will allow you to get a better handset, ultimately you are still paying for the handset it is just that you are spreading out the payments over the term of the contract, usually one or two years. Your decision should be based on how much you will likely use the phone.

If you are likely to use the phone quite a lot and would easily exceed the number of included minutes within a contract it is probably better to choose a contract with lower call costs. If you rarely make phone calls, a pay as you go strategy is probably best. There are a number of very inexpensive prepaid models under the $50 prices tag such as the Samsung U350 and the Nokia 2720 that would suit the needs of an infrequent user.

The key to purchasing a good inexpensive phone is to first clearly understand your own calling habits and requirements and then investigate the total cost of ownership over a one or two year time frame.