About Prepaid Cell Phones
Prepaid cell phone services allow people to have the use of cell phones without the commitment of a rate plan. Prepaid phones can be purchased at cellular phone stores, at department stores, at convenience stores and online. However, prepaid cell phone customers do not get all the benefits of their postpaid counterparts. What are the advantages and disadvantages of prepaid cell phones and what things should someone need to know in order to decide which prepaid phone plan to use?
Significance
For many people, prepaid cell phones fit their cellular needs. They want the convenience of a cell phone without the hassle of a monthly bill. Or maybe they don't consistently use a large amount of minutes each month. Or they don't want to sign a long-term contract. Or they have credit problems that would prevent them from getting approved for a rate plan. Or their teen wants a cell phone, but they don't want to worry about their child going over her minutes.
Types
All major cellular companies offer prepaid or pay-as-you-go plans. Customers can choose a per-minute rate for their calls. They can pay a daily access fee and then a lower per-minute rate; some companies offer several levels of this plan, allowing a lower per-minute rate for a higher daily access fee. Or customers can choose a monthly or "flex" plan that is similar to a rate plan. Their monthly rate is paid at the first of the month via a credit or debit card. There are also cellular companies, like Cricket, Tracfone, or NET10 that only provide prepaid cell phone plans.
Time Frame
Prepaid cell phone plans have a time limit. Some plans' minutes expire each month and customers have to add more minutes. Others have different expiration dates dependent upon the amount of minutes purchased; larger amounts of minutes purchased are good for longer time. Some companies have rollover minutes. Some companies have special rewards for long-term customers. Minutes for T-Mobile's Gold Reward customers are good for 1 year.
Geography
One disadvantage of prepaid plans is limited coverage because they do not have roaming. Cellular companies have agreements to share their towers so their customers can continue to make and receive calls outside of their calling area. Because additional fees apply--which the companies have no guarantee they can recoup from prepaid customers--this service is only offered to post-paid accounts. All cellular companies have coverage maps for prepaid accounts on their websites. Cellular phones that have WiFi capabilities allow for greater signal strength.
Considerations
Questions to consider in selecting a prepaid cell phone company are: How are minutes added to the prepaid account--buying minutes at a cellular store, over the phone or the Internet? What extras are included in the prepaid plan--text messaging, voice mail, data transfer? What phones are offered? All companies have phones they offer for their prepaid customers and are generally more expensive than those offered postpaid customers. Prepaid customers with companies like Verizon can only use the phones designated for prepaid accounts. Other companies, like T-Mobile and AT&T, use SIM cards, which allow prepaid customers to use any phone. How are the minutes timed? Most prepaid calls are rounded up to the next minute. What extra fees are included? Cricket charges a Regulatory Recovery Fee to each line on an account to help cover charges they receive from government mandates and programs.
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