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Prepaid Cell Phone Pitfalls
By Christina Mulberry
I'm in the business of cell phones, both phones that carry a traditional two year plan and those that are pay-as-you-go or prepaid. Some years ago, I was hesitant to ever recommend prepaid cell phones, but that has changed somewhat in recent years. Prepaid cell phones still have a significantly higher per minute cost when you choose the pay-as-you-go option. However, prepaid phones now have bundled plans that are much more competitively priced and can work well when matched closely with an individual consumer's actual use. The phones being offered are improved as well. These prepaid plans continue to allow consumers to get service even without a credit record and don't require a contract committment. Overall, they can sometimes be a good service alternative for the right person. Generally, when I talk about prepaid cell phone plans, I'm discussing their positive attributes, the features that appeal to customers. However, it can also be important to look at them from a reverse perspective before selecting them over a traditional phone plan. Afterall, the important thing about almost any service is that it isn't good or bad by itself, it's more about is it right or wrong for a given consumer. First when looking at the cost of a given prepaid plan there are two potential pitfalls. One is the issue of access charges. Some prepaid providers will charge a per minute fee for calls, say 20 cents if you don't select a bundled plan. Beyond this however, some prepaid providers will also charge an access fee. It's basically a charge that is incurred for every day you have the phone even if you don't use it. This is less prevalent than it once was, but it pays to read the details so that your costs aren't significantly higher than you anticipated. Of course the other cost consideration to be aware of is the per minute cost. If you get a bundled plan, you'll need to know how much additional minutes will cost if you exceed the monthly limit. If you are on a pay-as-you-go basis, you still need to consider that high per minute cost compared to your usage. Twenty cents a minute isn't bad if you only make 60 minutes worth of calls per month. That's only $12. However, if you occasionally have months with four times as many calls because your spouse travels for business periodically, that can become a burden. In addition, be aware of whether or not minutes (meaning the time you spend talking) are rounded up. If they are, this can seriously eat into your allotted minutes for the month. Secondly, you'll need to be aware of disappearing minutes. Again, this isn't as prevalent as it once was with prepaid cell phone plans, but it still exists with some providers. If you purchase 30 minutes of calling, don't assume that those minutes will be there next month if you don't use them. In some instances, they have a time limit. People who buy a prepaid phone to use only in emergencies hit this wall most often. They spend $10 for calling time, assuming it will be there in 4 months if they don't make calls other than in an emergency. They need to check the fine print to see how long those minutes will stick around. Another word of warning before you decide to throw out that 2 year plan and opt for prepaid, is to consider the type of phone you are willing to use and how much you're willing to pay for it. As most people know, prepaid cell phones aren't discounted like the ones you typically get with a 2 year plan. The discounted phones are subsidized by all of the income the cell phone company will make as you submit those monthly payments over the years. With prepaid phones, the company doesn't have that advantage, thus you pay more for the phone up front. This isn't always a problem, as there are many affordable phones available, some of them costing under $20. However, the other concern for some consumers is the phone itself. Most prepaid providers now offer more phones. In fact, some of them are multimedia phones and even smartphones. What you generally won't find, are the latest models of the higher end phones. If that's important to you as a consumer, you likely won't enjoy your prepaid experience. In the end, prepaid cell phones and plans are a great answer for some consumers. However, before making the switch, consumers need to consider whether or not it's the right fit for them. |
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Thanks for this info. I'm considering switching to prepaid once my current contract expires. This gives me some great ideas of what to look for and what to avoid.
CONTRIBUTOR'S REPLY
The good part is that if you give prepaid a try and don't like it, you aren't stuck with it! That's my favorite part. Generally though people seem to be pretty satisfied.
Thank you for sharing this information, Christina.
I needed a cell phone on the project I'm working on, so I opted for the Straight talk program offered by Walmart. The cost is $30.00 per month for 1000 minutes, 1000 texts. There is also an unlimited minutes/texts plan for $45.00 per month. Nothing carries over to the mext month.
Best wishes,
Frederick
CONTRIBUTOR'S REPLY
Great, hope this works out for you. Those are the same phones/plans that Tracfone offers.
Very well done Christina, In Australia, we do have a couple of other options for a 'type of use' for pre-paid accounts, such as a reduced amount for call costs, but any remaining balance expires after 30 days of purchase. Another account type is various amounts available, say 20, 30, 50 or 100 dollar amounts, but the credit is available for use up to six months from purchase. I agree with being careful with the actual flagfalls and costs for 'per call', in Australia, texting is almost free, yet making calls costs an obscene amount (around the 30 cents to 70 cents per minute, dependent on the carrier) and one can quite quickly use up credit in only 1 or 2 calls. Post paid is obscene for ongoing call costs as well. After being on a plan for 15 years, I spent a large amount of time deciding on staying or going to pre-paid. I chose pre-paid and my call costs for me, have reduced from $60 a month to $10 a month. Only due to being VERY careful of how I use the phone and how often I make calls, which are fairly short.
CONTRIBUTOR'S REPLY
Wow! Those are some seriously high calling costs. Good for you for having the discipline to control this so well.
I think the prepaid option is very important to have available, especially for a backup phone. I didn't mind paying $8.25 per month to be able to have a local phone number to go with the code on the security gate in the complex where my vacation home lives. Since there were not a lot of visitors there I never used up the 10 minute monthly allotment and it was good to have a back up phone.
CONTRIBUTOR'S REPLY
I agree, prepaid is sometimes the best option when you don't call a great deal.
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This intel was contributed by mulberry
mulberry
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May, 2012
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