Prepaid Cell Phone Plans – Are They For You?

Most Americans have cell phone plans with contracts that call for a certain number of minutes per month.

For example, your plan might include 450 minutes per month. If you go over that limit, you pay extra for the extra minutes. Use fewer than the 450 and, chances are, you lose the minutes you didn’t use.

An alternative to this kind of plan, that’s becoming increasingly popular with some Americans is a prepaid plan, often called pay-as-you-go. In this type of plan, you pay in advance for a certain number of minutes, then use them at your own pace. The advantages to this is that there are no surcharges, and you never have to worry about going over an allotted number of minutes.
The way these plans work is that you contact a service provider, and load minutes into your account. There is no contract and no big penalty if you drop out.

You could talk 500 minutes one month, and 200 the next. You will find that with some of the cell phone service providers, your unused minutes expire at the end of the month in which you purchased them. However, with others, you can roll over your the unused minutes – so long as you buy new minutes the next month.

This concept makes good sense for a lot of people. For example, there are many Americans who carry a cell phone for use only in emergencies or for short calls home. So even those plans that offer 250 minutes don’t make sense for them. There are also families who want to control how much time their kids spend on their cell phones. And if you’re on a budget, a pay-as-you-go plan will save you money as there are never those weird surcharges that can run up a $39.95 plan to more than $50.00 a month.

Most of the major carriers have new or expanded versions of prepaid plans. If you feel that one of these plans might make sense for you, contract several different companies for information as there are vast differences in pricing. For example, some carriers charge a flat fee per minute. In some cases the cost per minute goes down, the more minutes you buy.

On the other hand, there are other companies that charge much less per minute, buy levy a daily rate regardless of use. Some of these plans allow roaming and some don’t. Finally, unless you already have a handset that works with the pay-as-you-go plan you have chosen, you will probably pay more for the cell phone itself. This is because wireless companies heavily subsidize these phones, knowing that their customers will be locked into their service for 12 or even 24 months.

The major downside to prepaid plans is that you will most likely pay more per minute. For example, the Cingular GoPhone plan costs $0.25 per minute. In comparison its Nation 450 with Rollover gives you 450 anytime minutes for about $0.08 per minute (plus 5,000 nights and weekend minutes and unlimited calls to toher Cingular subscribers). Of course, requires a two-year contract and any minutes over the 450 per month will be billed at a cost of $0.45 each.

Monthly service plans are probably still the best bet for most people. But if you feel you are using your cell phone less than 300 minutes a month, or just prefer to not have a contract or a monthly bill, a prepaid plan just might be what the doctor ordered.

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Douglas Hanna has lived in the Denver metro area for more than 30 years and has written more than 100 articles on Internet marketing and on Denver and Colordo.