Gain Perspective on Prepaid Cell Plans

BusinessWeek

What's the deal with cell phoneplans? One month you havespare minutes and the nextmonth you go over, or make a poorlytimed call, and your bill doubles. Then ifyou change plans, you're locked intoanother 1-year contract. How can youwin? This lament, which appears in arecent article, sounds likea comedy routine. But the reality is thatit reflects the feelings of many cellphone users. So, what's the solution?

Prepaid Plan Facts

BusinessWeek

Prepaid plans are an option, but ifyou're a heavy cell-phone user or don'twant to do the legwork to compare prepaidplans, you might be better off stickingwith your traditional plan. The article points out that prepaidplans do have some significant benefits. For example, you don't sign any contracts.Instead, you purchase a starter kitthat includes your phone, some accessories,and a set number of minutes tohelp get you up and running. The kits canbe purchased at Target or Wal-Mart stores.

Taking advantage of prepaid plansalso enables you to avoid monthly taxes.You won't run over your minuteallowance, and you can purchase additionalminutes before the old onesexpire, carrying them over to the nextmonth. Sound perfect? Actually, it's not.Average prices for a prepaid plan rangefrom 15 to 25 cents per minute, considerablyhigher than some traditionalplans that have rates as low as 8 centsper minute. So if you're a frequent caller,prepaid plans might end up costing youan arm and a leg.

Perks and Possibilities

BusinessWeek

For parents who are concerned thattheir kids might run up the costs of a traditionalplan, a prepaid plan makes goodfinancial sense. It's also a good plan forindividuals who don't call often or carrytheir cell phones only for emergency use.And since regular plans require a credithistory when you sign up, your teenagercould more easily take on a prepaid plan.The following plan comparisons, whichappeared in the article,should help you in your search for thebest prepaid cell phone plan available:

• Boost, a division of Nextel, features astarter kit for $79.99 and a prepaid planthat costs 25 cents per minute. The plan isonly available in California and Nevada.
• EasySpeak from T-Mobile has a starterkit available for $79.99 and offers a varietyof prepaid plans that range from $10for 30 minutes to $100 for 665 minutes.
• Free2Go from AT&T Wireless alsofeatures a $100 a month plan thatextends to 833 minutes. The starter kit,however, is a little pricier at $99.99.There are also different prices for localand national calls.
• Cingular's Keep in Contact has anumber of confusing plans that the articlesays "will have you obsessing overtimes, dates, and amounts."
• The Pay-As-You-Go plan from VerizonWireless features the highest pricedstarter kit at $129.99, as well as a $20 activationfee in some states. Rates run 30cents per minute during the day and 15cents per minute for nights and weekends.

Although you can lose your cell numberif you allow your minutes to lapse,most plans give you a grace period duringwhich you can restock your minutes.