Prepaid Differences

             In comparing prepaid
phone plans and standard cell
phone contracts, there are
differences that the consumer
will need to take into con
sideration before deciding
which is best for them.

Prepaid Phone

• Phone looks identical to
  standard cell phone
• No contract needed
• No credit check
• No monthly bill
• Low cost for low usage.  For
  instance, emergency usage
  only may cost as little as
  $30 a year.
• Easier to control spending. 
  User buys only as many minutes as he needs.

Standard Cell Phone

• Phone looks identical to prepaid phone
• Contract required.  Many contracts are for a minimum of two years and expensive penalties can apply if the contract is ended prematurely.

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• Consumer must be credit-worthy to qualify for cell phone service.  In some cases, a large downpayment of several hundred dollars may be required from a consumer with poor credit before service will be provided.
• Customer receives a monthly bill similar to a phone bill for a landline phone.  Phone service may be temporarily or permanently disconnected for late payment.
• Low usage may still be expensive.  For instance, emergency usage only will cost at least $100 per year with one of the least expensive monthly plans.
• Not easy to control spending.  Many cell phone users have received unpleasant surprises on their monthly bill by being billed per text message and exceeding their monthly minute amount and being billed overage charges.  There are also “spam callers” who send unwanted text messages to consumers and the consumer is billed for them.