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Consider Prepaid Cell Phones

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Motorola Cell PhonesWhen you think of prepaid cell phones, what do you think of? If you’ve watched The Wire on HBO, a gritty drama about life in Baltimore, you associate them with drug dealers. If you were a fan of the Sopranos, you knew they were good for avoiding wiretaps. If you haven’t seen either, chances are you don’t associate them with anything. Most people don’t use prepaid cell phones because we naturally think to a nice buffet-type minute plan with a major carrier.

For our vacation to Europe, we used a pay as you go phone. We couldn’t use our own phones since we didn’t have compatible technology but our friend lent us her old phone. We went to a local Orange store (a pay as you go service company, bought a Sim card, and loaded it up with some minutes.

The cost of the chip? £0.

We put £5 on the phone and we now had cell service without a commitment, without any huge up front payments, and we only pay for the minutes we needed.

Topping Up

Topping Up is the term used whenever you add minutes to your phone. There are a variety of ways you can top up. The easiest was to a credit card to the SIM card, which would top it up in pre-defined increments. If you didn’t want to link a card, you could top up by going to an ATM/cash machine or to a local grocery store. You pay for the minutes, the register prints a voucher, you text the code to the phone company and your minutes are added in just a few seconds.

A lot of people in UK and Europe use pay as you go cell phones and there may be something to it too… Americans pay more than anyone else for cell phone service. We pay more than $600 a year, while some people pay less than $140 a year!

Consider Prepaid Cell Phones

Take a look at your cell phone bill and review how many minutes you used last month, assuming it was a typical month. Be sure to add every minute, from the Anytime minutes to the Night & Weekend minutes (whatever your provider calls them). Then just divide your monthly cost by the number of minutes and you have your per minute cost. I have a phenomenal plan from Sprint, the SERO plan from years ago, where I pay $35 a month for 500 minutes and unlimited data and text messages. Last month, I used 674 total minutes at a cost of about 5.1¢ a minute.

How does that compare to a prepaid phone? I’m going to use T-Mobile’s program as the benchmark only because the rates were the easiest to find. With T-Mobile, you can pay $1 a day on the days you use the phone or ten cents a minute. For me, that plan doesn’t make sense because I pay less than 10 cents a minute plus I get the benefit of unlimited text and data.

Another fixed cost to consider is the cost of the phone itself. Usually prepaid cell phones don’t offer a lot of the bells and whistles of other phones, so what you’ll be getting is a bare bones phone for somewhere in the neighborhood of $25 – $50. It’s a fixed cost that you probably wouldn’t have with a fixed plan so be sure to include it in your comparison.

One other side thought to consider… you probably will use your phone less if you’re paying per minute. I think it’s a great way to save money if it makes sense for you and if you’re not already in a contract.

If you use a prepaid phone, I’d love to hear your opinion of it in terms of call quality, savings, convenience, etc.

(Photo: bchai)

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63 Responses to “Consider Prepaid Cell Phones”

  1. “Americans pay more than anyone else for cell phone service. We pay more than $600 a year, while some people pay less than $140 a year!”

    I’m just curious – does this have much/anything to do with the geopgraphy of the US? The size of the US is on par with the size of the entire continent of Europe and has large chunks of area with low population density. Providing coverage to some of these areas probably isn’t cheap.

    Just throwing the idea out there – maybe this has very little bearing on cost.

  2. Thanks for posting this. I have started researching this topic, and am considering making the switch. I am curious to see what “Pay as you go” company you (or other readers) would recommend.

    I use very few minutes each month, and I really think it would be possible to save some money by going with this option.

  3. zapeta says:

    I like the idea of going prepaid while overseas. A prepaid cell phone is a good way to cut expenses but I’m used to the cool features on my phone so I don’t think I’ll be switching any time soon.

  4. I use Virgin Mobile. Pay $60 per year for one and $80 per YEAR for other.

    Those fees get me minutes @ 25 cents per – but over 10 minutes in a single day and calls are 10 cents per minute.

    I never buy extra minutes, using phone only occasionally.

    Love it. Convenient and very frugal

  5. lostAnnfound says:

    Husband & I switched to Net10 earlier this year. Used to have a family plan where we shared 500 minutes/month and between the two of us used about half of that. With texting added on and taxes, etc., we were paying about $90/month. We got our Net10 phones for $30 each and that included 300 minutes. Service & reception is great. It is costing us about $15 a month, 10 cents per minute and 5 cents per text, no daily usage charge. This cost us about $30 per month for the two phones combined. And yes, I have been using it less. He uses it about the same (didn’t use much before to begin with), but it really is no inconvenience. If I use more, I add on more minutes. This way we just pay for the minutes we actually use.

    • grace says:

      good for you; and i’m very poud fo you for the switch. i have been using net10 for over 3yrs; no regrets at all, very good service

  6. Like Mark above my wife and I use Virgin Mobile for our cell service. I spend about $60-70/year for mine, and my wife spends closer to $150/yr. For someone who doesn’t use their phone much (like me) it is the ideal cheap (but reliable) cell service. Even for my wife – who when she talks, talks quite a bit – Virgin is still extremely affordable.

  7. Karen Kay says:

    I switched to Boost Mobile a couple of years ago, and I’ve very happy with it. I don’t use my cell phone a lot (mostly when I travel), and so I save a LOT of money. It’s been a while since I figured it out, but I think I spend about $75/year.

  8. MichaelM says:

    We looked at going prepaid, but between my wife and I, we talk for about 600 minutes a month. I can’t find a pay-as-you go that will be cheaper than the T-mobile $50 for 750 minutes. Even if we only use 600 minutes, that comes out to 8 1/3 cents a minute.

    I’ve ordered some hardware so we can use VoIP when we’re at home, and maybe get down to 400-500 mobile minutes a month, then pay-as-you-go will start to be more affordable for us.

  9. The Other Schmitty says:

    I have the T-Mobile “Pay as you go” plan. I could spend as little as $10/year, but that would only buy 35 minutes. It costs about 10 cents/minute if you buy minutes in $50 or $100 increments. The nice thing about this plan is that the minutes rollover as long as you don’t let them expire.

    I’ve been very happy with their service, although it’s very basic. Their phones aren’t very good, but you can always buy an unlocked phone elsewhere.

  10. Mark Baldwin says:

    I’ve been using AT&T’s (Previously Cingular) prepaid plan for a couple of years now, and I’ve saved a bundle. I don’t use my phone much, so it cost me about $100/year.

    Now, I am a geek and love Smart phones, and really like the fact that I have my notes and Outlook on my phone. The ‘problem’ is that I don’t think there is a prepaid phone that is also a smart phone out there (this may be changing). So how did I solve the problem?

    I found that the AT&T perpaid sim cards don’t really care what phone they are in. So I bought the cheapest phone available (actually $25 with a $25 time credit), then threw away the cell phone and used the sim card. For a phone, I got on eBay and bought a very nice used HTC 8525 (Windows Mobile 6, full keyboard, touch screen, wi-fi) for about $120.

    Note, data is fairly expensive with accounts like mine, so I do not use AT&T for web access unless I’m desperate. However, since the phone has Wi-Fi I can get on the Web at most coffee shops.

    Mark

    • Mark Baldwin says:

      One correction on my last post. Phones come in two forms, locked and unlocked. Locked phones will only work on the network that they were sold for.

      But as far as I know, prepaid sim cards work with any phone for their network.

      I would like to hear if this is not totally true.

      Mark

  11. JamesV says:

    I have a pay as you go Tracfone. It’s $20 for 60 minutes plus I think about 2 months of service before the minutes expire, but minutes do roll-over. I did find out though, that if you let the service plan expire, you do not lose your phone # or service completely. The phone just becomes Inactive. You can easily activate the phone again by buying more minutes right thru the phone with your credit card. So if you did not need the phone available to use for a month, two or three +, you could just leave the phone service @ zero dollars expense, and re-activate it immediately in about 3-5 minutes time frame (phone call from your expired phone) when ready, and be back in business. I like this ability alot and I’ve done it many times…

  12. gina says:

    My folks use prepaid for their low-end phone with T-mobile, 1000 minutes for $100 that expire in 1 year. Each text msg = a minute. That works for them.

    I have a G1 smartphone and use it all the time. At the time t-mobile had the least expensive data plan.

    I’ve been seeing commericials that t-mobile is charging $50/month unlimited. That’s a good move because almost everyone I know would rather text then talk anyway, so demand for voice is falling. But I’m guessing demand for data is increasing. I wonder if the unlimited plan includes data…..must look it up

  13. Leah says:

    Thanks for this post! I’d written off pay-as-you-go in the US as being too expensive, but given how little I use my phone, your calculations have made me reconsider. I’ll have to sit down and crunch my own numbers.

    I’m a little confused about the T-Mobile plans you mention, though. As I read it, their plans are either 10 cents a minute + $1/day (for the Pay by the Day plan) or 10-33 cents a minute, depending on how many minutes you buy (for the Pay as You Go plan). IIRC correctly, the Pay by the Day plan rates are pretty similar to the AT&T PAYG plan a friend had, but it looks like AT&T has a lot more PAYG plans now than they used to.

  14. LovePrepaid says:

    I love my Virgin Mobile prepaid – one of the best ways to go. The AT&T prepaid is pretty good as well. I like the fact that I put $20 on roughly every 90 days, and I’m in good shape. I buy a 30 text package for $2 every 30 days, and at 18 cents a minute for calls, I’m in good shape. Anything similar on a contract phone would run me $35 a month minimum. Does the phone have all the bells and whistles? No. Do I care? Not really.

  15. Rianne says:

    I’m in Canada, so different rates and plans (and companies). I use a pay as you go phone and it’s wonderfully cheap. I pay $10/month for unlimited text messages, and 1 cent/minute evening and weekend calling. Daytime minutes are steeper – 39 cents/minute, but you can get plans that are the same rate anytime.
    I spent $60 on my phone and got a $50 credit when I opened the account. Most months I spend a bit under $20.

  16. Yana says:

    I had Verizon on contract for over 12 years before switching to both an STi Mobile prepaid phone and an unlimited MetroPCS phone. We still have the STi Mobile phone as backup – it uses the Sprint network. I finally took the full plunge, cancelled MetroPCS and signed up with PagePlus Cellular prepaid for both me and my husband. The savings have been tremendous, we got very feature-rich phones new from eBay, and our average monthly cost is $11 each. I find discount deals on buying time and can’t imagine going back to throwing away money and having a cellular provider hold a contract and termination fee over my head. I think that’s the worst thing about contract cellular – the provider can give you the short end of the stick, such as a new phone that doesn’t perform, and then charge you under threat of ruining your credit report if you don’t pay. As someone who doesn’t feel a need for credit, and having found excellent cellular service at a price that makes me happy, I really feel I am “sticking it to the man”. It’s a great feeling!

  17. Patman says:

    I switched over to T-Mobile prepaid about 6 months ago. Prior to that, I had been using AT&T paying about $55/ month. But, based on the usage I had (dropped significantly after it was no longer a work phone), I’ve cut my bill to what works out to be about $10/month.

    Best part (other than the savings?) Getting my AT&T phone unlocked so I kept using the device I was used to when I went to T-Mobile.

  18. Mark Baldwin says:

    One other comment on the issue of phone numbers. It’s either difficult or impossible to keep your phone number with a prepaid plan. But I can suggest a solution…

    Get Google Voice. The price is reasonable (i.e. free), it has great features, you get to select your number easily, and it stays the same no matter how many cell phones (or land lines) you go through.

    The trick with Google Voice is getting an invite. I got mine in about an hour by buying an invite on eBay for about $2.

    Mark

  19. Yana says:

    I was able to port my number from MetroPCS to PagePlus, but also like Google Voice to protect our real phone numbers from unwanted callers. Google Voice gives a lot of control to its users. Control is good when the Do Not Call list is useless, and also to get rid of political and charity callers.

  20. Chuck says:

    I just cancelled my Verizon Wireless family plan that was costing us close to $90 per month. I switched to Page Plus Cellular (using the same network and the same phones) and we’re now spending $50. My wife has the Unlimited Talk and Text plan ($40) and I use about 150 minutes per month (about 6 cents per minute). I rarely use my phone, but now my wife can talk all she wants and doesn’t have to count minutes or avoid using the phone at the end of the month. It’s awesome.

  21. Karen Kay says:

    About porting your number… I had some problems, but I was able to do it. The number portability regulations don’t discriminate against prepaid phones.

    • Martha says:

      After our trip to Europe I was interested in switching my normal cell phone to a pay-as-you-go cell phone. I found out that you cannot port a number from a normal cell phone to a pay-as-you-go cell phone but you can port a pay-as-you-go phone number to a regular/normal cell phone plan.

      • Karen Kay says:

        Martha, that information is incorrect. I ported my number from a “normal cell phone” to a “pay-as-you-go cell phone”. I did change providers, though; from Sprint to Boost Mobile.

  22. Scott says:

    I’m using a SingTel prepaid SIM card right now in Singapore and love it! I can call locally and send text messages back home to the states for pretty cheap (S$0.08 I think, or US$0.06).

  23. I would be willing to switch, but I don’t have a home phone. I don’t know if I would feel comfortable enough to just have a prepaid cellphone.

  24. Mac^2 says:

    Americans pay a ton for their service for several reasons. The big two are:

    1) In Europe and most of the rest of the world, the CALLER pays a per minute premium for calling a cell number, while the owner of the mobile phone doesn’t pay at all. This equates to lower mobile phone bills if you don’t make many outgoing calls.

    2) Americans demand subsidized phones, and the US telcos build the phone cost into the plan. Swapping phones and carriers is far easier in Europe because of this.

    I don’t talk much on the phone, so I use prepaid exclusively. Currently I have the T-mobile pay as you go service, $0.10 = 1 minute. There are no extra fees and surcharges on top of this (unlike contract plans).

    • MichaelM says:

      Luckily T-mobile’s new plans mostly do away with the subsidy idea. They’re now promoting a 0% interest 20 (22?) month payment plan that can go along side some plans, but I think it’s best for us Americans to get over the idea of subsidy…

  25. Simon says:

    I lived off of T-Mobile’s Prepaid plan for the Sidekick which was $1/day for unlimited web, text, and IMs and $0.15 per minute/call for 4 years. Only spent about $40 plus I got discounts and points for purchasing my refills online.

    That was when I was tight on money. Now, with steady income, I of course went with the iPhone.


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