How Prepaid Cell Phones Work

Problems with Prepaid Cell Phones

Prepaid cell phone plans require users to monitor usage so they don't run out of minutes.
Prepaid cell phone plans require users to monitor usage so they don't run out of minutes.
©­ Photographer: Raycan | Agency: Dreamstime

While a prepaid cell phone offers many advantages, it also can present problems for its users. One of the biggest problems is the cost per minute, a serious disadvantage for anyone who talks a lot on a cell phone.

With increased interest in the prepaid market, prepaid phone rates have dropped and plans improved. Prepaid provider Boost Mobile, for example, offers a flat-rate, monthly unlimited talk plan for $45 in some states. In most cases, however, per-minute rates still usually are lower with traditional contract plans [source: TMCNet].

Here are some other disadvantages with prepaid cell phones:

Expiring minutes and service -- The minutes you buy for your prepaid cell phone may come with an expiration date of 30 or 90 days. If so, you'll lose them if you don't use them by then. You also may need to buy minutes regularly to extend the activation period. Buying 60 minutes for $20, for example, might extend your service for another two months [source: Wireless Guide].

Unexpected fees -- With a prepaid cell phone, you won't pay monthly taxes or termination fees as with traditional plans, but you may find other unexpected fees -- or higher fees than you'd expect for extra services. You may be charged a daily access fee of 99 cents to $2 for days you use the service or for every day. You also may be charged for roaming, sending text messages or photos, downloading ring tones or games and accessing the Web [source: CNET].

Limited features -- You probably won't find the latest, most sophisticated features on the average cheap prepaid cell phone. It probably won't be a picture phone. It also won't have Internet access or the ability to share videos. However, some companies are offering more high-tech phones. Virgin Mobile, for example, offers phones ranging from basic to those with mobile Web, camera with flash, audio and picture messaging, Bluetooth wireless and mobile instant messaging and e-mail.

Untransferrable phone number -- If you switch to another phone carrier, you probably won't be able to transfer your prepaid phone number. Worse yet, if you allow your prepaid cell phone to deactivate by not using it or buying minutes within the prescribed time, you'll probably be assigned a new number when you reactivate it. That means having to notify everyone about your new number [source: HubDex].

Next, let's take a closer look at prepaid cell phone plans and how to go about finding the right one for your needs.