Prepaid or Postpaid? Which is better?

Most wireless service is sold on month-to-month or one-, two- or three-year contracts, with a monthly fixed cost that includes a set amount of local calling. Before signing a contract, you must go through the carrier's credit check. Every month you get a bill based on the cellphone plan you choose and any extras you used that month (e.g. minutes used above your plan, long distance, etc. etc. and so on).

If you decide to cancel service, it will cost you! Most providers have an early termination penalty. This can range from a flat fee to a charge per month remaining on your contract. This gives you a limited window of opportunity to cancel service without any penalty if you find out that a provider just doesn't meet your needs.

There is an alternative plan that allows you to change the number of minutes and other provisions: Prepaid Cell Phone Plan.

If you are buying the phone for emergencies only, then the prepaid cellular phone may save you more money in the long run. You won't be under contract and you don't have to pay a monthly package fee for having the service. You can buy the airtime as you need it (with some exceptions). And you do not have to pay a deposit for service.

Prepaid is also a way of learning about your usage patterns before committing to a long-term
monthly billing wireless contract.

Advantages of prepaid cell phones:

• No contract to sign, no long-term commitment
• No monthly monthly bill to worry about.
  
• Better cost control. You know exactly how much you will spend.
• No hidden fees.
  
• No credit checks needed. Perfect for the credit challenged, since monthly billed plans require credit approval.
  
• Great if your usage varies from month to month.
  
• No security deposits. Some monthly plans may require a deposit.
  
• Topping up your account is easy and you can do it in many ways, at any time, by going on-line, by phone, bank machine or with a prepaid card.

Disadvantages of prepaid cell phones:

• You pay more per minute.
  
• If you don't use the phone for an extended period of time, you lose the money in your account.
  
• You can't accept collect calls or third-party billed calls.

Prepaid cell phones are ideal for:

• people who don't want to be locked into a year-long contract
• first-time cellular buyers who don't know how many monthly minutes they should sign up for.
• people who don't want to go over their budget
• people with damaged or no credit history
• occasional users
• people who want to buy their children a phone for emergency use
• travelers

For Prepaid Plan service providers, go to Prepaid Cell Phone Plan page.