All You Need To Know About Prepaid Or Contract Phone Plans In Canada

Upon arrival in Canada, one of the major things you need is a cell phone or a mobile, as Europeans would prefer to call it.

Smartphone has undoubtedly become an important part of our lives, especially in this era where there is a wide range of services:  Amazon, Uber, Google Maps, and so on one can access just at the touch of a button. 

We are sure you would love to choose the best option for something you spend so much time on every day.

The essence of this article is to study one of the basic questions you’ll have to answer when selecting a Canadian phone plan: if you want a prepaid plan or a monthly contract. We will later discuss the difference between the two and assist you in understanding which one is most suitable for your needs.

The definition of prepaid and contract phone plans

For the sake of clarity, let us discuss the terminology, in case it’s different from that of your home country/country of origin:

1. The prepaid plan is also known as “pay-as-you-go”: This is a type of cell phone plan where you are allowed to pay for your services ahead of time. You have to buy a limited number of calling minutes, texts, and data, and once you exhaust it, you will be unable to use those services unless you pay to reload your account.
2. A monthly contract plan is also known as“postpaid”: This is a type of cell phone plan where you are expected to pay for your services after using them, usually on a scheduled day every month. The basic difference is if you surpass your quota for calls, texts, or data, the monthly plans usually won’t cut you off. Your phone provider will instead just charge you for the overage and then include the cost to your bill for the next month.

Please note that overage charges on monthly plans, especially for data, can be quite pricey. For instance, many Canadian phone providers will demand an overage fee of $10 for each 100 MB of data you use upon surpassing your monthly limit. Therefore you should thread with caution. 

In addition to this, there are a few benefits and disservices to both. 

Also, numerous providers offer loyalty incentives and luxuries to customers who sign up for a phone contract. Fido, for instance, provides a rewards program for customers by offering them bonuses such as additional data and weekly deals with other companies. 

For the sake of clarity and comfort, a lot of phone customers settle for automatic payments for their mobile phone bills, or they pay via online banking. To achieve this, you will require a bank account with a bank you can trust. Please note that HSBC Canada offers their Newcomers Program, which is particularly developed with newcomers in mind. 

All you need to know about credit checks for phone plans in Canada

When choosing between a prepaid and contract plan, you should consider if you can get a positive credit check or not. The purpose of having a credit check is to evaluate your financial capabilities in Canada.

This is often needed for services that you are to pay for on a monthly basis because businesses would want to be sure that their customers will be able to make their payments monthly. 

For those who are new to Canada, getting a positive credit check may be tasking because you are most likely not to have a Canadian credit history. If this is the case, you may have no option other than to settle for a prepaid cell phone plan.

Additionally, it won’t take you a long time to build your credit history in Canada if only you follow the appropriate steps.

Do they have phone providers who may authorize a credit check for newcomers to get a monthly contract?

Research shows Virgin, Fido, and Koodo provide the most competitive monthly contract phone plans. Interestingly, they encourage newcomers to contact their customer service agents directly to complete a credit check. 

The good news is that each of these companies is willing to process these credit checks from newcomers just to find out if they could be authorized for a new monthly phone contract, with no assurance that they will obtain a positive credit check. 

That being said, newcomers are encouraged to complete the credit check just to be sure. It is said that the approval process for newcomers was a bit less strict than for others, that is to say, that it is very friendly for immigrants. Also, the requirements for new immigrants in some of these companies are flexible. 

Furthermore, international students who are schooling in certain provinces are permitted to make use of their study permit and foreign identification to complete a credit check with some phone providers but this to a large extent depends on the place of study because providers’ options vary from one province to the other.

Finally, you can only find out f you’ll be approved for a contract by contacting the company and completing the credit check. 

Another important thing is to ensure you have your documents ready because each of these companies may request slightly different documentation. Still, one thing is sure, you will require some identification. Most times, a credit card and/or a Canadian bank account will take care of some of these requirements. 

All you should know about prepaid phone plans without a credit check

All major mobile phone providers offer prepaid plans, and you. Nevertheless, Public Mobile, Lucky Mobile, and Chatr Mobile have the most competitive prepaid plans because the three of them only offer prepaid plans, with no options for monthly contracts.

Alternatively, by default, all prepaid plans have a bring your device (BYO) plan, which means that your phone should be unlocked for you to sign up for a plan.

You are given the option of buying a phone through the provider. However, you will have to pay the entire cost in advance. As a result, prepaid plans may not be a good option for you if you wish to buy a costly phone model and pay it off over a longer term via a phone contract.

How can a newcomer build their credit history in Canada

We advise you to commence building your credit history as soon as possible if you’re new to Canada. Aside from obtaining a monthly contract for your phone, having a good credit score, including strong credit history, will assist you to do things far beyond that, such as getting a car loan, renting an apartment, or getting a mortgage! 

Thankfully, we have listed a few simple steps below which you can take to start building your credit history on arriving in Canada.

1. The first step is to get a bank account: To manage your Canadian finances, including your new phone, you’ll need a bank account. In as much as paying your cell phone bill (and other bills) can be easily done via pre-authorized payments, you will still require a bank account to ensure your pre-authorized payments are functioning. That being said, opening a Canadian account should be one of the first things you should do as a newcomer to Canada. 
2. The second step is to get a credit card (not prepaid): The most accessible way to start building your credit history is through a credit card. Many banks in Canada provide newcomers with banking programs that permit them to obtain a credit card when they open an account with the bank. Also, it is a fact that new permanent residents can easily be authorized for a credit card when compared to newcomers on temporary statuses, like a work or study permit. In addition to this, the most suitable credit card should not be prepaid, as prepaid (or secured) credit cards lack a relevant impact on your credit history.
   Other tips for you include being careful not to exceed your spending, ensuring you do not miss your credit card payments, always keeping your balance below 70% of your available credit, and not taking cash advances domestically. 
3. The third step is to make your monthly credit card payments on time: You have to make sure you make your monthly payments, especially now that you have your credit card. It is essential as a newcomer. In the nearest future, you will have difficulty completing a credit check in the nearest future k due to having a history of late payments.
4. The fourth step is to pay your full amount: The best thing to do monthly is to pay off the total amount on your credit card. This will go a long way to show that you are a responsible spender and can be trusted to pay back your credit. In as much as paying back the full amount may sometimes not be possible, but make sure to make your minimum payment at least, else you’ll be jeopardizing your credit score.

Be assured of using that credit history after building your credit history responsibly after a few months. 

In conclusion, we sincerely hope that this article is an expository one, and we hope to have answered all questions about to prepaid or contract phone plans in Canada.