Prepaid cell phone plans offer plenty of benefits. They’re extremely cost effective, they offer basic service on a month-to-month basis with no long-term contracts or cancellation fees and they generally do not come with hidden fees or taxes.
Why Should You Use Prepaid?
Prepaid cell phone plans are usually extremely cost effective. The best prepaid cell phone plan costs anywhere between $20 and $45 a month, while most traditional cell phone plans start at $50 a month and have plenty of hidden fees tacked on to the bill at the end of the month. Since users cannot run over their minutes, they’re perfect for anyone, including teenagers or children who do not pay their own cell phone bills.
Prepaid cell phone carriers do not require you to sign a contract, so anyone can get a prepaid phone for the desired time period—without a credit check or down payment. With most traditional cell phone plans, the customer must sign a minimum two-year contract with the carrier. Doing so usually allows the customer a discount on cell phones and other hardware including tablets. On the other hand, prepaid cell phones offer exactly what they claim: a certain number of minutes for a designated time period with no contracts and no monthly bills. You can cancel your plan at any time after you’ve used all your minutes for the month.
While most long-term contracts come with pricey fees (a company might offer an unlimited month of service for $60 a month but charge over $35 in taxes and fees—more than half the cost of the service plan!), prepaid cell phone plans usually only charge you for the monthly fee, plus the state sales tax. With prepaid cell phone plans, you get what you pay for: basic cell phone service that can be used anywhere in the country. Most also come with text messaging packages and data plans for smartphones.
Choosing the Right Plan
All of the major cell phone carriers now offer prepaid cell phone plans. There are three ways to choose how to pay for a prepaid cell phone: by the number of minutes you want each month, unlimited plans and data plans.
Many prepaid cell phone companies offer similar prepaid plans that are comparable to long-term contract plans. You can choose a plan based on the number of minutes for voice calls you want each month. For example, if you want 50 minutes per month for a phone you won’t use often, you might only need to pay $5 for the plan at $0.10 a minute. You can usually choose a base plan that offers at least 100 minutes for a 30-day time period. After you’ve used all your minutes, you can usually top up your minutes and add on a package of 50, 100, 150 or 200 minutes to your plan. The rates usually run around $0.10 a minute.
Many companies now offer unlimited plans in addition to plans sold by the minute. Unlimited plans start at around $30 to $35 a month. Many companies also offer a discount if you register a credit card with the company that automatically charges your card for the following month. Virgin Mobile (owned by Sprint) offers $5 off per month for iPhone users who register a credit card on their account. Most of these plans offer unlimited minutes and some offer unlimited texting as well; though some plans might only offer one or the other.
Finally, since smartphones have become ubiquitous, most prepaid cell phone companies offer data plans to accompany their cell phone plans. Customers can purchase data packages by the minute, and some companies even offer unlimited data plans. Buyer beware: when purchasing an unlimited data plan, it’s best to act under the assumption that no prepaid cell phone company will ever offer a truly unlimited data plan. Most cell phone carriers cut your speeds down after you’ve used a certain number of megabytes of data.
Choosing a Mobile Device
One of the downsides to choosing a prepaid cell phone plan over a traditional contract plan is the cost of mobile devices and the availability of certain devices. Since traditional contract carriers make most of their money through the cell phone services they offer, they are able to offer their customers extreme discounts on cell phones because they make that money back after the customer has completed their two-year service contract with the company. Since prepaid companies offer such low prices and do not force their customers to sign a contract, they charge full value for the phone. With a contract carrier, customers might get a new phone for free or pay as little as $50 for a new iPhone. With a prepaid carrier, customers could pay $500 to $800 for a new phone, depending on the brand and availability.
One of the other downsides to choosing a prepaid cell phone company is the availability of certain devices. Companies like Virgin Mobile, who once carried all existing iPhone models, now no longer carry the iPhone and don’t know when such phones will be offered again. Most companies offer a large selection of new and refurbished android phones, though. As long as the customer doesn’t mind paying for the phone upfront, generally the cost of the phone with the service will still be cheaper than if the customer purchased a two-year contract. For example, a new iPhone might cost $450 with a prepaid carrier, but the monthly cost of the service would only be $25 a month. After two years of service, the customer will only have paid $1,050 for both the phone and the service. A customer in a two-year contract might not have needed any money down for a new phone but will end up paying $2,280 for two years of service and fees if the service costs $60 a month plus $35 a month in taxes and fees.
Some of the features of the prepaid cell phones might not be as convenient as the features of a cell phone that comes with a two-year contract. If you purchase a phone that requires a lot of data to manage your apps and internet, you’ll need plenty of data minutes to keep those apps running; however, if your data slows down after you’ve hit your cap every month, you might not be able to use all the features your new phone has to offer. Once you’ve hit your cap, some prepaid cell phone carriers allow you to restart your monthly plan by paying another $25 mid-cycle. This will allow you to refresh your voice minutes, text messages and data minutes automatically. The only downside is that you will have lost the remainder of your month of service; refreshing your monthly cycle can add up and end up costing more than a traditional contract cell phone plan.
Since most prepaid cell phone plans offer ala carte features, you can pick and choose which features work best for you. Some of the additional features include added minutes, text messaging packages, international call, mobile hotspots and cell phone protection plans.
If you purchase a small package of voice minutes every month, you might want to purchase additional minutes should your minutes run out. You can usually purchase more minutes by logging onto your account online and topping up your minutes. You can also top up minutes by purchasing a top-up or gift card at a major cell phone retailer like Best Buy.
Should you choose a plan that offers limited text messaging, you can also top up your text messages the same way you would purchase additional voice minutes: with a top-up or gift card.
If you’re planning on making international calls or leaving the country for any amount of time, you can purchase an international calling plan for your phone. The benefit of purchasing an international calling plan with a prepaid cell phone company is you can use your international plan on a month-to-month basis. Most long-term contract carriers will make you restart your contract or force you to purchase international calling for the rest of your contract period if you want to add long-distance calls to your phone plan. You can also purchase a prepaid cell phone if you plan on going out of the country for any period of time. All you need is an inexpensive cell phone, and you’ll have a way of making phone calls in your destination without paying outrageous roaming fees.
Many prepaid cell phone companies allow you to add a mobile hotspot to your phone. By purchasing a mobile hotspot, you can use your cell phone to log onto the internet with your computer, laptop or other mobile devices. Many plans start as little as $3 a day, but companies also offer plans for $5 or $10 a month for a certain amount of data. Your plan expires when you hit your data cap or when the month is up.
Many prepaid plans also offer a protection plan for your devices. For as little as $7 a month, you can purchase a plan that will allow you to replace your phone at little or no cost should you lose your phone or damage it.
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