What Is a Pay as You Go Cell Phone?
A “Pay as You Go” cell phone is pretty much the opposite of a standard cell phone plan.
Most cell phone plans require long-term contracts (at least a year, normally two years) that must be secured using a credit card or bank card — don’t forget about the monthly fees and expensive phones.
The cheapest standard cell phone contracts offer somewhere around 300 minutes of talk time per month, and since most people will use more than this, minimum fees don’t really apply. If you want unlimited talk time as well as a few bells and whistles, you’re looking at somewhere around $80 to $100 a month — after you pay for the phone and setup the service. What happens if you go over your minutes with a standard cell phone plan? You’ll be charged a hefty overage fee for each minute you go over — and if you have unused minutes at the end of the month good luck “rolling them over” into the next month. Standard cell phone plans are rigid, expensive, and not always the best option, especially for people on a limited budget.
How Do Pay As You Go Cell Phones Work?
The average ‘pay as you go’ cell phone plan is perfect for people without a ton of money to throw at their phone bill. For starters, pay as you go cell phones don’t come with monthly fees or long-term contracts — this means you won’t need a credit card to start service. Instead, you buy a phone card from any number of stores (gas stations, grocery stores, big box stores, cell phone stores, etc) and the purchase of that phone card counts as your payment to the cell phone company. For most pay as you go cell phones, you only have to add about $20 credit to your phone every three months to keep your phone active.
Using a ‘pay as you go’ plan means you have to buy a cell phone that is intended for use with pay as you go plans. Not every phone is compatible with this kind of cell phone plan. You can buy these phones from big box stores like Target or Wal-Mart, but make sure the phone you buy is made for the carrier you want to use.
What Are the Pros and Cons of Pay as You Go Cell Phones?
One big downside of pay as you go plans is the cost of minutes — they end up costing about $0.25 each, a much higher rate than a standard cellular plan. Sure, you buy the minutes ahead of time (usually in units of $20) but at a quarter a minute, that $20 card will only buy you 80 minutes.
Another downside — it is hard to find pay as you go phone plans that offer their members “perks” such as free phones or gifts to loyal customers.
One positive aspect of the pay as you go cell phone — if you have a credit card, you can tell your pay as you go carrier to keep that card on file and automatically debit it every 90 days. This saves you the hassle of running down to the store and loading another prepaid card.
The big advantages of a pay as you go cell phone plan are the lack of a contract, no requirement that you have a credit card, and the complete lack of those pesky monthly fees. Yes, your minutes are more expensive than with a standard cellular contract, but the straightforward billing and adaptability of a pay as you go plan mean they are more convenient and easier to use than traditional cell phones.
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