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How Prepaid Phone Minutes Work

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You may have heard that prepaid cell phones make for a cost-effective alternative to monthly plans. But how do they work?

Keep in mind, there are many companies offering prepaid, and each “contract” (for lack of a better word) functions differently. Before you commit, make sure you read the fine print and completely understand how payment works.

Pay As You Go

If you’re looked into prepaid at all, you’ve probably seen this phrase. What isPay As You Go“?

With most prepaid phones, you only purchase service as you need it. Instead of signing a year-long contract that starts at 30/month, and then increases to 90/month at some arbitrary time, prepaid lets you “fill up” your phone with service cards. No contract.

These cards vary wildly depending on price and provider. Hypothetically, though, a card could cost $20-30, and offer 90 service days, 200 minutes, 500 texts, and 1 GB of data. Or, you can visit the company’s website and cherry-pick which you need.

Service Days

Service days keep the phone in a network. These almost always expire with time, and have to be bought every few months, depending on the package. Some companies let you purchase year of service for a 1-time payment, between $50 and $150 USD.

Minutes

Minutes are usually what you think of when you hear “prepaid phone”. They are used to make phone calls. For example, you “load up” your phone with a 300-minute card. Each minute you spend in a call, you slowly use them up.

With basic phones, they sometimes serve for texting, too. A single text could cost 0.30 of a minute, while a multimedia message could cost 7 or 8 minutes to send or receive.

Texts

In higher-end phones, like smartphones, texts are refilled separately from minutes. They function the same way as minutes, starting with a set amount that is slowly used as you send and receive individual text messages.

(If you choose this plan, don’t be That Guy who sends fifteen small texts instead of one large one… your wallet will thank you later…)

Data

Arguably one of the best parts of prepaid smartphones is that when you run out of data, you don’t get hit by an overcharge fee. Instead, it simply stops working until you refill it.

Some companies also offer no-contract unlimited.

Other Questions: Lightning Round

-Prepaid phones aren’t limited to flip-phones: some providers offer no-contract smartphones, too.

-You won’t need a down payment, or credit check, to buy a prepaid phone.

-Often, you can transfer your phone number and unused service between phones.

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