Introduction
If you have had issues with credit in the past or you are just tired of carrying a long-term cell phone contract, investing in a prepaid cell phone may be a worthwhile alternative for you to consider. Prepaid cell phones offer most of the same basic services as contract phones but without being tied down to a specific carrier. Prepaid cell phones can be purchased at almost any convenience store or directly from a wireless carrier. You then purchase minute packs or plans (either online, over the phone or in-store) that give you the airtime necessary to use the phone. It is important to research both the advantages and disadvantages of a prepaid cell phone before purchasing your first phone.
Credit
One driving factor behind the popularity of prepaid cell phones is that there is no need for a credit check. A typical contract phone credits you minutes, which you then pay for at the end of the month. With a prepaid cell phone, you pay for your minutes each month before you use them. Since there is no risk to the phone company in not getting paid, there is no need to check how reliable your credit history is before providing you cell phone service. Prepaid cell phones allow those with bad credit, who would normally have to provide anywhere from a $100 to $500 security deposit to be approved, the chance to have a cell phone without a deposit.
Contract
Another way that prepaid cell phones work is the lack of a contract. All the major cell phone carriers have a contract plan. Until 2007, most cell phone carriers did not offer phone service unless you signed a one- or two-year contract. Canceling on this contract can result in hefty cancellation fees. With prepaid cell phones, you are not required to sign a contract. As long as you buy minutes, your phone will work.
Overages
Prepaid cell phones also have the benefit of no overages. Traditional cell phone plans charge you for each additional minute you go over your plan. This can add up, as most cell phone carriers can charge up to 15 cents for each minute you go over. Since a prepaid cell phone stops working once you run out of minutes, there are no risks of getting surprise overage charges on your next bill.
Features
As prepaid cell phones increase in popularity, more services are offering more options and features for your cell phone plan. For example, most prepaid cell phones now offer the ability to text message. Most also include the ability to download games, wallpapers and ring tones to the phone with a valid credit card. Some also offer Internet capabilities, as well as MP3, picture and video camera capabilities. Payment plans are also evolving, with some phone carriers providing prepaid benefits (no contract or overages) while at the same time offering specified monthly minute plans. This takes away the need to buy prepaid minute cards each month.
Disadvantages
Prepaid cell phones are not without their disadvantages. First, most cell phone services do not provide a free or discounted cell phone with your service. This can mean paying anywhere from $50 to $400 for your first phone (depending on the features you desire in the phone). It is also important to read the fine print of your service agreement, as some companies will charge a daily fee, regardless of whether you use the phone or not. Some companies will also charge more if you use your phone while roaming or call long distance outside your area code. Research each phone plan carefully to choose one that best fits your needs and lifestyle.
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