Prepaid Cell Phone Plans: Why and When They're Better Than Pay-As-You-Go Plans

A prepaid plan that offers generous day-time minutes, plenty of (and sometimes unlimited) night and weekend minutes, and, perhaps, roll-over minutes is the best way to keep costs down (and service up and running) for adults and teens who use their phone regularly.

Although some wireless providers have plans that begin as high as $50 a month or more, plans are available for as little as $29.99 a month (AT&T Wireless offers plans beginning at this price and includes roll-over minutes). In the case of AT&T Wireless, the low-end plan does not include extra night and weekend minutes, but for another $10 a month subscribers can have 1000 night-and-weekend minutes (which don't roll-over, but don't reduce the balance on the account either). Some plans (as the one mentioned above does) offer as few as 200 calling minutes a month. Others offer 300, 400 or (for those who want to pay $70 or more a month) unlimited calls.

For about $50 a month prepaid service providers usually offer additional time or other features for reducing per-call costs. Free calling to certain contacts, free mobile-to-mobile calls, or special night/weekend rates are among those features.
Plans often offer a lower per-minute rate as well.

As with any cell phone plan (prepaid or not), subscribers must pay attention to how many calls they make; but a basic, prepaid, plan offers quite a bit of freedom to make calls or send text messages.

Pay-as-you-go plans may offer a high rate (such as 25 cents as minute, as compared to 12 cents a minute), and that means that $15 or $25 on a pay-as-you-go account will be used up in fewer calls. The person who uses the phone fairly frequently is very likely to discover that his balance drops half-way through the month, which means he must choose to buy more time or do without the phone for a while. As the parent of recent and currently college students not living nearby, I found that I didn't want them doing without phone service and that they often didn't quite get to the next month without running out.

People who have pay-as-you-go plans often have difficulty making business calls or other calls involving being put on hold. Incoming calls, of course, cause the balance to drop fairly quickly as well.

Some pay-as-you-go accounts allow subscribers to make unlimited calls to other mobile phones with the same carrier, and such terms may include a daily access fee ($1 is common) on the days when the subscriber uses the phone. This type of account may offer a lower per-minute rate for calls as well. The catch, of course, is that one call per day would mean a substantial amount of the balance would be reduced by the daily access fee alone. The subscriber who makes several calls a day, particularly if those calls are to other mobile phones; but the individual who makes only one call a day will discover that the access fee may make the cost of the call higher than a higher per-minute rate (without the access fee) would have. Obviously, to make this kind of service stretch across a month, an individual could potentially need to spend as much as $30 a month just for daily access fees, depending on how many days a month the plan were to be used.

Pay-as-you-go accounts that offer straight, per-minute, rates are simpler but the most expensive (for the person who uses the phone regularly). For those who truly use the phone on in emergencies, losing any balance as each expiration date is reached means losing money. Of course, spending (and losing) $15 or so a month in order to have the peace-of-mind of emergency phone service is worth it to some people. Those who find they want/need to use their phone more, however, usually find themselves buying more phone time two or three times in a month.

With pay-as-you-go accounts refills must be made before reaching a certain date if the balance is not to be lost. Keeping track of changing refill dates isn't always something people want to do. Even those who do may forget. (I had a family member who put $15 a month on her phone for months. She had built up over $300 on the the account, only to forget to replenish the account one month and lose all that money. ( I wasn't the one who lost all that money, but it was even painful for me to just know that this occurred.) Of course, subscribers to this type of arrangement can make larger payments farther apart to eliminate the risk of forgetting to beat the expiration date, but doing this involves spending larger sums of money all at once - not something everyone wants to, or can, do.

A low-end monthly plan allows someone like a college student to be conservative with calls when the account is new, let any roll-over minutes build up, and then have those built-up, extra, minutes offer more freedom to have longer conversations. Parents with more than one child may find that a low-end plan offers a spare phone, which can be offered to whichever person in the family needs to bring along a cell phone. Again, roll-over minutes offer yet more flexibility for this kind of use.

When several family members share service, even a $70 or $90 a month plan could potentially turn out to be less expensive than several individual services.

Prepaid monthly plans can be the best of both worlds. There's no chance of accidentally running up a bigger bill than planned. Still, with the "extras" offered by service providers who want to make plans appealing enough to attract more subscribers, prepaid plans can offer just that much more flexibility for subscribers who regularly use the phone.

Plans do cost more each month than, say, a $15 prepaid card that is applied to a pay-as-you-go account; but for more calling freedom and/or more users in a family, a prepaid plan will - in the long-run - prove to be most economical for most people.