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Nuts and bolts of prepaid plans

Prepaid carriers generally require you to purchase minutes (or minute calling cards) only as you need them. Some also offer an auto-pay option, charging a set monthly rate to your credit or debit card to keep the service going and your airtime minutes stocked.

But just like traditional cellular, the universe of prepaid offers consumers a dizzying assortment of service offers and options. You need to know in advance what you want and for what you're willing to pay. This means it's important to carefully read the fine print before settling on a plan.

Prepaid plans typically include local and long-distance calls, voice mail, caller ID, call waiting and roaming (many prepaid carriers will assess two minutes of airtime for every minute you use out of your local network area). Some also offer three-way calling and call forwarding, as well as international dialing -- though you might have to sign up for these services separately or pay an additional fee.

Prepaid: Good for the taciturn
This plan type's steep per-minute charges, ranging from 10 to 60 cents, is its main downfall, but it's the price you pay for a no-commitment/no-contract arrangement. Used airtime is generally rounded up to the next minute. In some plans minutes can roll over, in others they don't. Some prepaid providers allow you to bring your current cell phone number over to their service, others won't. Some will allow you to use your own phone with their service plan, some won't. Make sure you address these concerns before starting the service.

Your airtime needs ultimately will determine whether these plans are a viable option. For example, if you opt for only 40 minutes, your calls will likely end up costing a steep 30 to 50 cents a minute. The more minutes you buy, the less you pay. Some plans charge 10 cents per minute for blocks of 1,000 minutes or more. This is still pricey, at $100.

Be aware that prepaid cellular providers who do not use minute calling cards can sometimes charge additional costs on top of the prepaid minutes you buy, such as daily access fees. These can be charged every day, whether or not you use the phone, or they might only be assessed on the days when you actually place a call. Access fee-based plans tend to come with lower per-minute rates.

Carriers offering monthly auto-pay options tend to be among those providing the most attractive per-minute offers without daily access fees. On the downside, should you need extra airtime in a particular month, the cost of additional minutes might be 45 cents or more each (plus, in some cases, an extra service fee) with these carriers. Even so, auto-pay plans can be a good calling option if you find a minute plan that suits your needs.

Be aware, however, that if your minutes aren't completely used up during the specified time period, or if you don't add new ones within a set number of days prior to their expiration, they will be lost. In most prepaid plans, the only way to save or roll minutes over to the next cycle is by buying additional blocks of airtime within a specified time frame before your expiration date.

Services like TracPhone display your remaining available airtime and the expiration date of your minutes prominently on the cell phone's screen. Other services send e-mails or text messages to inform you of your status. In any event, you'll have to become disciplined and good at time management and minute-tracking. Otherwise, you could end up paying considerably more for cell service than you otherwise would have with a traditional carrier.

Bankrate.com's corrections policy
-- Posted: Nov. 8, 2005
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