Prepaid primer: the what, why, and how of prepaid cell phones

This article was prepared by Mr Ben Patterson from cnet.com


Prepaid primer: the what, why, and how of prepaid cell phones
By Ben Patterson (July 14, 2005; updated June 26, 2007)

Prepaid cell phone plans used to be sketchy alternatives for those with less than stellar credit ratings, but not anymore. They can be ideal for anyone who's had enough of restrictive two-year contracts, scary overage fees, or micromanagement of cell phone minutes. Likewise, while they used to be more expensive than traditional plans, prepaid costs have begun to fall, and the plans have become just another way to break into the cell phone game. As the popularity of prepaid has skyrocketed, even the big brand-name carriers have jumped onto the bandwagon.

Prepaid plans are pretty self-explanatory: you open an account and pay for airtime up front. When you run out of minutes, you either pony up for more or, if you've had enough, simply let your plan expire. Want to switch carriers or cancel your service? No problem--you're not under contract, so you're free to jump ship anytime.

Though they can have advantages over traditional plans (see our cell phone buying guide for more information), prepaid plans aren't for everyone. If you must have the latest and greatest handset, if you're a heavy cell chatter, or if you want the lowest possible per-minute cost, you might be better off with a traditional monthly plan. But if you need the phone only for emergencies, if you use your mobile very infrequently, or if you're simply a commitmentphobe who'd rather not sign a two-year contract, you're an ideal candidate for a prepaid plan. Not only can it save you money in the long run, but it can also be a great way for cell phone newbies to get their feet wet. For example, a senior citizen who has never used a cell phone may appreciate the simplicity, while a teenager buying a first mobile can learn the responsibility that comes with it.