Sunday, March 25, 2007

Prepaid Cell Phones - Best ways to budget and still keep in touch, pt 1

Are you looking to trim down on your expenses? Do you have a vacation planned and figuring out how to save more? If you're looking to squeeze more from your money (just like most of us working folks), then look into prepaid cell phones.


Pre-paid cell phones are simply mobile phones that do not have contracts. Airtime minutes are provided by purchasing airtime cards and tying the card's PIN to the phone through Internet or dial-in activation. More airtime minutes can be added through purchase of additional cards as desired. Airtime minutes must be used by the service date that could vary from 60, 90, 120, etc. days from activation. These are also known as pay-as-you-go cell plans.

Are pre-paid cell phones right for you?
  • Controlling costs. You only pay the service for the minutes that you use. Contract phones will charge you a basic monthly whether you use 1 minute or 300 minutes of airtime for that month. Any thing over your basic minutes will incur additional payment.
  • Don't want to get locked into a contract. Majority of contracts seem to be 24 months. That might be too long for you.

How do the numbers stack up?
  • Compare the typical lowest monthly plan at $39.99. Sprint has the Power Pack 450 with the following:
    • price per month: $39.99 USD
    • anytime minutes: 450
    • Offpeak minutes: unlimited
In 3-mo's, this plan would cost roughly $120 USD, even if only 3 hours, or 180 minutes of air time is used. This happens to me a lot.
  • Compare to a T-Mobile $50 USD Prepaid card with the following
    • Includes 400 Whenever Minutes. No annual contract or credit check
    • Buy airtime as you need it, good for 90 days from time of activation
    • Minutes include Nationwide long distance (including Alaska & Hawaii)
    • No roaming charges on Nationwide on the T-Mobile USA network
Note: Airtime cards are non-returnable, non-refundable and non-replaceable.
  • If someone uses the cell phone sparingly, the cost difference for a 90 day period can be up to $70 USD. In one year, this could be a savings of up to $280 USD. Besides, airtime cards can conveniently be bought in almost any retail stores, including Best Buys, Sam's Club, etc., and online.
What does this mean in the real world?
  • If you're a parent, pre-paid cell phones make great phones for children, especially if you want them to have something for emergency. You can control the costs and at the same time, teach them about budgetting (airtime for now, but hopefully leads to budgetting money later on). Additionally, if the child gets out of hand, take the phone away. The financial burden on you is negligible.
  • If you're a college student on a budget, you may simply get a pre-paid phone and forego installing land lines in your dorm or apartment.
  • If you like to travel and wonderin how you're gonna save up for the next trip. You should consider a prepaid phone over a contract cell phone or even a landline in your apartment.
  • If you're job is shaky and you believe that there's gonna be a layoff, consider a prepaid phone to trim the fat in your expenses.
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