5 Reasons to Consider Prepaid Cell Service

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Prepaid cell service—as in service without a contractual obligation or early termination fee—continues to surge in popularity. If you’re intrigued by making the switch from a traditional contract plan, but haven't been keeping up with the fast-changing options to do so, here’s why you might want to try prepaid:

1. Prepaid plans offer a diversity of pricing schemes. You can buy prepaid service in three different ways:

Prepaid bundles. These range between 30 to 5,000 minutes and cost $10 to $400;
Pay-as-you-go plans. These charge 5 to 25 cents per minute used, with or without a $1 to $2 daily access fee or per-day-use charge; and
Monthly-fee plans. These are much like a traditional contract plan, and range from 50 minutes to unlimited minutes per month.

2. You may save money—especially now. In the last Consumer Reports survey of satisfaction with cell-phone service, more than 70 percent of those who had switched from a regular contract-based plan said prepaid was costing them less. And that was before what’s starting to look like a price war in prepaid. The latest salvo: Two Tracfone monthly plans under the brand name “Straight Talk,” available in about half of the country. One plan offers 1,000 voice minutes, 1,000 text or multimedia messages, and 30 MB of data over Verizon’s network for just $30; the other unlimited voice and text, plus 30 MB of web access for $45.

Boost Mobile offers unlimited voice, text messaging, web, and push-to-talk for $50 per month. Virgin Mobile offers unlimited voice plans for $50 from $80, but charges an additional $10 for unlimited text messaging, and for 50MB of web access.

3. Prepaid phones are no longer just plain vanilla. True, you can’t— at least yet—get prepaid plans for the iPhone, Palm Pre, and some other hot phones. But you can get models with cameras, web access, Bluetooth capability, and QWERTY keypads. For example, MetroPCS Communications offers the Blackberry Curve, while both PCS and Leap Wireless offer various Nokia, Samsung, and Motorola phones. (See our full Ratings of cell phones and smart phones, available to subscribers.)

4. Apps and capabilities are growing. A few examples: Virgin Mobile phones have access to social networking, chat, and find-a-date services. Boost offers Fox Sports newscasts, games, and navigation applications.

5. You may not need to buy a new phone. Prepaid service isn’t provided only by relatively unfamiliar names, but by the major contract carriers. (Sprint offers prepaid through its separate Boost brand.) In some cases, you don’t need to switch phones to switch plans. You may even be able to use your GSM phone (from AT&T, Net10, T-Mobile, and Tracfone) with another GSM carrier.

However, prepaid plans aren’t for everyone, and not every prepaid option is a bargain. We’ll detail what to watch out for in an upcoming blog.