Are Prepaid Wireless Phones a Good Deal?
Verizon, AT&T and other mobile phone providers are offering pre-paid cell phone service with pay-as-you-go billing. If you like the idea of not having a long-term contract, and you don't use a cell phone all that much, a pre-paid cell phone could be a good option. But first you'll have to sort through all the intentionally confusing plans and offers...
Prepaid Wireless: Confusing on Purpose?
Prepaid wireless is a way to keep things relatively simple. It works just like rent: you pay for a month's worth of use in advance, and if you don't pay you get kicked out almost immediately. There are no heart-stopping surprises at the end of the month, when you learn that you (or someone else) ran up a four-figure tab. With a prepaid wireless plan, you pay for a certain number of minutes in advance, at a certain rate per minute. When you run out of minutes, you have to buy more. That's simple, honest, and true. But of course, phone companies make less money when things are simple. Here's how your seemingly simple prepaid mobile phone bill can get complicated.
First, there's the "use it or lose it" aspect of the bundle of minutes you buy at the start of each month. Again, this works just like rent; you pay $X for the ability to use an apartment for a month, but it's up to you how much time you actually spend in the apartment. That sounds reasonable, but it isn't with phone service. With rent, the landlord gets the same profit no matter how much or little you use the apartment. But phone companies make more profit when you don't use all your prepaid minutes. That 7 cents a minute bargain becomes 14 cents if you use only half of your prepaid minutes.
Phone companies want you to buy more minutes than you will actually use, and so they make their pricing plans complex. Here are some examples, from several companies offering prepaid cell phone services.
Comparing Prepaid Wireless Plans
AT&T prepaid wireless goes by the brand name GoPhone. It might better be named GoAway because the pricing plans are so complex they actually discourage people from buying. In fact, AT&T deliberately makes it difficult to find out what it costs. For some reason, they force you to compare the specs of various cell phones, then they ask you to "enter your ZIP Code so we can show you the best offers available in your area." It doesn't get any less simple than that.
I'll save you the trouble of drilling down into the geo-spatial specifics. AT&T offers a $50/month unlimited plan, a $25 for 250 minutes plan, a $2/day plan, and a ten cents per minute plan. If you have a smartphone, you'll have to buy a monthly data plan to use web, email and apps. There is no pay-per-use data plan option.
Verizon prepaid wireless also requires your zip code, but you can sort of figure out your costs before providing that information. With Verizon's Pay As You Go plan, you can buy minutes, or days of unlimited minutes. If you want simplicity, go for the 25 cents/minute plan, and pay 20 cents per text message. That's expensive, but simple.
There are two Daily Access options, in which you pay only on days when you use your phone. If you don't use your phone on Monday, you don't pay for Monday. Pay $1/day, and you get unlimited mobile-to-mobile calling. Calls to landlines, and calls made on nights & weekends will cost to cents/minute extra. Texting is also ten cents per message. Bump up to the $2/day Daily Access plan, and you get unlimited calling, but you'll still pay two cents per text. Things get much more complicated as one considers the expiration dates of prepaid minutes, whether you expect to call (or be called) only from Verizon Mobile customers, on weekends, or at night.
If you're really confused, that's exactly what Verizon wants. That's why they offer the Prepaid $50 Unlimited plan. This is for people who are considering the Daily Access plans, but they fear that all the intangibles may push them over the $50/month mark. This plan promises "unlimited web" access, but alas, not with a smartphone. You'll have to buy the Prepaid $80 Plan, which gives you a 1GB data allotment. And of course, the expiration date of your refills will vary, based on how big a chunk you buy.
Net10 is a bit simpler, but there are still some twists. You can prepay $20, $30, $60 or $100 per month. If you buy larger chunks, the minutes are cheaper and won't expire as soon. For example, if you buy 200 minutes for $20, they expire in 30 days. 600 minutes will cost $45, they expire in 60 days. A block of 1500 minutes for $100 is the best deal (6.7 cents/minute), and gives you 180 days to use them. And just to add another wrinkle, you can also prepay $50 for unlimited minutes on a 30-day plan. But none of these plans lets you simply buy a chunk of minutes and use them whenever you like, without worrying about them expiring.
You may not have heard of Net10, but Tracfone is one of the best known names in prepaid wireless. The companies are owned by the same corporation, but they offer completely different sets of prepaid calling plans. At the entry level is the 30 Minutes Value Plan for $9.99/month. Other options are 60 minutes for $19.99, 200 minutes for $39.99 and Family Plans that let you have multiple Tracfones. You can also buy chunks of airtime that come with bonuses such double or triple minutes an future paid airtime purchases. For example, you can buy 800 minutes for $120, and get double minutes on future paid airtime, or 1200 minutes for $130, and get triple minutes on future airtime purchases. You might end up paying less, but it requires a bit of math, hair pulling and a little fortune telling.
You can also shop around for prepaid wireless service from other providers. T-Mobile offers 1000 minutes for $100, and they are good for one year. They also have a variety of Monthly 4G plans that might make sense for smartphone users.
Virgin Mobile may have the best (and least confusing) offer of all. Their payLo plan gives you 1500 minutes for $30/month, which works out to just 2 cents/minute! You also get 1500 texts and 30MB (not GB) of web data. The only minor hitches are that unused minutes expire each month, and payLo plans require you to buy a payLo phone from Virgin Mobile, but the most expensive one I saw was only $49.
Some Tips to Help You Decide
Prepaid cell phones are great if you don't use your cell phone that much. They simplify the process of owning and using a cell phone by allowing you to buy the phone that you want and prepay for minutes that you will be using during the upcoming weeks. You don't need to have a credit card, you don't have to sign a contract and you can cancel your relationship with the cell phone company at any time. It can be a good deal if you want to give a cell phone to a child or senior who will only need it on an occasional basis. However, if you use your prepaid cell phone a lot during a month you will have to frequently load your phone with more minutes. Also, since prepaid minutes are generally more expensive than contract cell phone minutes, you will rack up a larger monthly bill using your prepaid cell phone than if you had a contract cell phone plan that offers you unlimited minutes.
When shopping for a cell phone and cell phone service package you need to determine what is going to be better for the amount of time you spend on your cell phone. People who use their cell phones infrequently, or who just want a cell phone in case of an emergency, are generally better off using a prepaid cell phone, while people who spend a lot of time on their cell phones are better off signing up for a regular cell phone contract.
Here's my advice... talk to friends or neighbors in your area who have cell phones, and find out which carrier has the best signal and coverage in the locations where you plan to use the cell phone. It's not uncommon for phones from one carrier to work great in a certain location, while another carrier has a weak signal or none at all. Then use the information above to compare the pre-paid plans offered by the cellular companies that have good service in your area. Try a pre-paid cell phone for a month or two, and if you find you're using it more than you anticipated, upgrading to a service contract with a set monthly fee may make sense for you.
Do you have something to say about prepaid wireless phone service? Post your comment or question below...
Posted by Bob Rankin on 10 May 2012
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