Prepaid services are bought in advance — for example, a prepaid card or pay-as-you-go. Typically, you’ll bring your own phone to this plan.
With prepaid services, you put money into an account. Every time you make a call, send a text or use data, the cost is taken off your balance. When your balance runs out, you buy more credit, “topping up” your account.
Prepaid services are typically less expensive than long-term contracts. You only pay for what you use. There’s no risk of “bill shock” — getting a bill that’s much higher than expected.
But not all pre-paid service is created equal. Some plans allow you to continue using the service even if your account balance is at $0. But you’ll have to pay, and it might be at a different (hint: more expensive) rate than your current plan. There also may be interest charges added if you take too long to pay.
Ask questions when signing up for a prepaid plan. Find out what happens if you go over your balance. You should know how to:
- check your usage balance
- contact the provider’s customer service department
- complain about the service
If you get a new phone in the deal, you should be told about:
- any early cancellation fees, how much they decrease each month, and when you’re free from them
- the retail price of the phone and the amount you paid
- where you can find information about device upgrades and the manufacturer’s warranty