How Prepaid Works

There really is no
mystery to how prepaid works. 

Any consumer can walk
into a store that sells cellular
phones and buy a prepaid
phone.  The consumer does not
need to have a good credit
record; in fact he or she does
not need to have credit at all.
No one will run a credit
check before the consumer
can buy the phone.  The
consumer will not be asked
to sign a contract or to
commit themselves to an
ongoing monthly bill.

The person buying the prepaid phone will choose from a few models that are displayed, and the phone will usually come pre-loaded with some amount of credit already in the phone and ready for use.  The customer can buy extra minutes right there or can wait until they need more minutes later.

[Pullout:

]A call cannot be made from a prepaid phone unless there are enough minutes already on the phone at the time of the call.  Prepaid cell phone users’ minutes are deducted from what is on the phone at different rates of usage depending on where the call is being made to.  

 

For instance, local calls may be deducted in “real minutes”, but a long distance call from California to New York may use “4 minute charges” for each actual minute of conversation.  That is how prepaid cell phone users are charged long distance rates, by deducting more than 1 minute for each minute of long distance time.

 

As standard cell phone service becomes more costly, more people are considering a switch to prepaid phones. To keep up with competition, cell phone companies are offering more options for prepaid phone users including select plans that offer free night and weekends and unlimited mobile-to-mobile calls.