AT&T Offering Free Prepaid Phone Service: What's the Catch?

AT&T really wants you to sign up for one its prepaid plans. And it's willing to offer two free months of service to seal the deal.

Credit: Rob Wilson/Shutterstock

(Image credit: Rob Wilson/Shutterstock)

As part of a rebranding effort — AT&T is switching the name of its prepaid service to the more straightforward AT&T Prepaid from AT&T GoPhone — the carrier is offering two months of free service when you sign up for its $45-a-month plan with 6GB of LTE data or its $65-a-month unlimited data plan.

Note that signing up for autopay knocks $5 off your bill each month, bringing the cost to $40 and $60, respectively.

There's a catch with AT&T's offer, though. The free month comes in the form of account credits, and you only receive them in the third and 12th month of service. That means you'll have to stick with AT&T Prepaid for a year to reap the full benefit of AT&T's offer.

AT&T's unlimited prepaid plan also comes with several limitations. The biggest one is that data speeds for the unlimited are capped at 3 Mbps. To put that in context, Cricket caps its data speeds at 8 Mbps, and it finished second-to-last when we tested LTE speeds for nine carriers around the country. MetroPCS matched the performance of its parent network, T-Mobile, during our testing.

MORE: AT&T Phone Plan Buying Guide: What's Best for You?

In addition, streaming is capped at 480p quality. For some users, that's good enough on a phone screen, but forget about watching anything in HD on your device. Also, the unlimited plan doesn't include a mobile hotspot feature.

Unlimited data may sound tempting, but it's AT&T's 6GB plan that's actually the more appealing of the two. For one thing, 6GB is a lot of data for $40 a month. (Hit your 6GB limit and AT&T throttles speeds to 128 Kbps for the rest of the month.) Only MetroPCS offers that much data at that price level, after recently boosting the data allotment on its $40 plan.

Sprint's prepaid plan also costs $40 a month, but caps LTE data at 4GB; AT&T's Cricket subsidiary also offers 4GB, though for $35 a month, once you factor in a $5 autopay discount.

Still, saving money on your monthly phone bill is a primary reason to turn to prepaid service, and pocketing $80 if you stick with the superior 6GB plan from AT&T Prepaid may appeal to budget-minded users who still have heavy data demands.

Overall, we rate MetroPCS as the top discount carrier, though, and its $40 plan now offers the same 6GB found in AT&T's best prepaid option. If you don't need as much data as 6GB every month, you can find a lot of low-cost cellphone plans that will save you even more money on a consistent basis.

Philip Michaels

Philip Michaels is a Managing Editor at Tom's Guide. He's been covering personal technology since 1999 and was in the building when Steve Jobs showed off the iPhone for the first time. He's been evaluating smartphones since that first iPhone debuted in 2007, and he's been following phone carriers and smartphone plans since 2015. He has strong opinions about Apple, the Oakland Athletics, old movies and proper butchery techniques. Follow him at @PhilipMichaels.