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How Prepaid Cell Phones Work


Prepaid Cell Phone Plans
Virgin Mobile's basic prepaid plan gives users the Aloha cell phone.
Virgin Mobile's basic prepaid plan gives users the Aloha cell phone.
Image courtesy of Virgin Mobile

When you start looking at prepaid cell phone plans, you'll find a lot of variations. You can, for example, buy a phone with basic service and then just add minutes as you need them. You can select a more high-tech phone with added features and services, and you can buy larger bundles of minutes to get them more cheaply. You also can choose a prepaid phone contract that's almost a hybrid of a prepaid plan and a traditional monthly plan. Let's take a closer look at examples of each.

Pay-as-You-Go

Virgin Mobile offers a $14.99 LG Aloha phone with mobile Web, text messaging, ring tones and games. You need to spend $20 every 90 days to keep the phone activated. Calls cost 10 cents per minute to or from other Virgin Mobile phone numbers and 20 cents per minute to everyone else. On the high end, you can get get a SliderSonic phone for $79.99 (with $19.99 free airtime) that also offers an MP3 player, camera with flash, video recorder and playback, picture messaging, Internet access and a flash drive memory slot.

T-Mobile's To Go prepaid phone starter kits start at $29.99 for a Nokia 2610 phone with headset and speakerphone; AOL, Yahoo, MSN and ICQ instant messaging; text messaging; call waiting, caller ID, voice notes and a calculator. Whenever minutes start at 30 minutes for $10. For the tech conscious, T-Mobile offers the Motorola RAZR V3 phone at $99.99 with quad band world phone, Bluetooth wireless, camera, video, voice recorder, phone book, clock and calculator.

Monthly Plan Options

TracFone's fairly simple 50 Minutes Value Plan automatically adds 50 minutes and 30 days of service to your prepaid phone every month for $9.99. If you need more, you can add minute bundles of 50 (for $10) or 100 (for $20). You have to sign up for the plan with a credit card or checking account number, but you can cancel at any time.

ATT's GoPhone offers monthly plans ranging from $29.99 to $69.99 with a balance rollover on minutes and nationwide long distance. The cheapest plan provides 200 anytime minutes at 15 cents each, while the most expensive plan offers 650 minutes at 11 cents each with unlimited mobile-to-mobile and night and weekend calling. As with TracFone, payment is automatically deducted from a credit card or checking account.

Start with the plan, not the phone, experts advise. Then look at the service quality you can expect to receive from the plan in your area. Finally, whether you choose true pay-as-you-go or a monthly plan, look closely at charges as well as minute rates. These may include:

  • A daily fee applied every day or on each day you use the phone
  • A roaming charge outside a certain area
  • Fees that vary based on the time you use the phone
  • Added charges for services such as text messaging, sending pictures or using the Internet

[source: ConsumerAffairs.com]

Once you've picked your plan type, the next decision is which provider to use. Let's look at that next.


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