Home     Blog

How Do Prepaid Cell Phones Work?

A prepaid cell phone is one that allows users to pay in advance for their service without the commitment and penalties of a long term contract. While contract plans are still the most popular form of mobile phone service, prepaid cell phones have become very popular in recent years and have grown in use amidst rising contract prices. Most cell phone companies now provide prepaid cell phones and prepaid cell phones are even available in many convenience stores and gas stations.

How It Works

Prepaid cell phones are actually rather easy to understand. When the customer purchases a prepaid cell phone, he/she sets up an account that is directly connected to that specific phone. The customer is able to add money to the account via online payments, over the phone, or cash. Some prepaid cell phone companies allow users to buy a certain number of minutes for a specific price while others charge a fee for each minute that is used.

Many users switch to prepaid cell phones, or “pay-as-you-go” phones, in order to avoid the penalty fees associated with most contract plans. Likewise, users who cannot guarantee sufficient funds for a monthly cell phone bill can use prepaid cell phones to have service when he/she can afford it without worrying about an impending deadline.

Unlike a contract plan, which charges the user a bill after the term of service ends, a prepaid phone charges the user before the term of service begins, allowing the user to know exactly how much he/she is paying for the service.

The disadvantage is that they are deactivated when a user’s monthly term of service ends or his/her minutes run out. In contrast, contract plans are usually only deactivated when a user fails to pay the bill for two consecutive months, but the cell phone company may charge the user a late fee.

The following is a list of prepaid plans from various cell phone companies.

how do prepaid cell phones work

Virgin Mobile

Virgin Mobile has been a proud sponsor of prepaid cell phones for years now. In fact, Virgin Mobile does not sell contracted cell phone plans whatsoever. The company has recently added three new prepaid plans to their collection. The first includes unlimited texting, data, email, and web plus 300 anytime minutes for $25 per month. The second includes unlimited texting, data, email, and web plus 1200 minutes for $40 per month. The third includes unlimited texting, data, email, web, and talk for $60 per month.

AT&T Go Phone

AT&T is, perhaps, the largest cell phone network in the United States. Unfortunately, their plans are dramatically overpriced. The company is paying attention to customer complaints, however, as they have introduced the AT&T Go Phone. The AT&T Go Phone provides the same quality and coverage as the AT&T network but with no longterm contracts. The service allows customers to keep their current number, buy any number of minutes at any time, and there’s no credit check.

TracFone

TracFone is another company that is entirely based on prepaid cell phones. TracFone allows customers to purchase a certain number of minutes without worrying about contracts. The company also includes several different deals and specials like the Double Minutes For Life card. By purchasing the DMFL card or even certain phones, customers get double minutes for life on whatever they pay for. For example, if a customer purchases 200 minutes, they automatically get another 200 minutes for free.

Net 10

Net 10 is a popular prepaid cell phone company that is slowly getting larger. The company averages 10 cents per minutes, although some plans vary in rates. Net 10 has four plans: the first includes 200 minutes for $20, the second includes 300 minutes for $30, the third includes 600 minutes for $45, and the fourth plan includes 900 minutes for $60.

Boost Mobile

Boost Mobile is known for their unlimited plan but few people realize that Boost Mobile also hosts a Pay As You Go plan. Regular nationwide calling on Boost Mobile’s Pay As You Go Plan costs 10 cents per minute while their unlimited plan consists of nationwide calling, texting, web, pictures, video, audio, Boost Mobile Walkie Talkie, instant messaging, email, and 411 for only $50 per month.

Metro PCS

Metro PCS is another unlimited prepaid phone company, although Metro PCS does not have a Pay As You Go plan like Boost Mobile does. However, Metro PCS only charges $40 per month for the same unlimited features as Boost Mobile. Customers may have to pay more for certain features but talk, text, web, data, email, and picture mail is all included in the $40 plan.

VN:F [1.9.22_1171]
Rating: 10.0/10 (1 vote cast)
How Do Prepaid Cell Phones Work?, 10.0 out of 10 based on 1 rating
Follow Will.Spencer on
  • CarlB

    Of all the ones you mentioned, NET10 is definitely my favorite! I pretty much tried them all and in my opinion NET10 is the one providing the best value for money and reliable service. Been with them for about 6 months now and am still a happy customer. No hidden fees, no contracts, no roaming charges, low call rates, no service fees (like ‘daily use’ fees), great network coverage – these are all things that makes them stand out from the rest.

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
  • santosh

    the phone was purchased in usa now i wish to use it in India its sim is blocked as it shows it is samsung T401g. Kindly help me

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
  • sue davies

    sorry i am still totally confused. you talk about pay as you go and no contract but then say this plan is $30 a month, another plan is $40 a month etc etc . That to me is almost a contract as as soon as you don’t put the money on, your service is cancelled and you lose any money you have paid and not used!
     In uk you get a phone , get/ buy a sim card  put some money on it . you then use the phone a lot or a little and only put some more money on it when you run out . you keep your ”service”  and number so can leave for several months , maybe years?- probably have to leave about equivalent of a dollar on it , but then just start using it again when you want to.( obviously have to have enough money on it to make a call.) This particularly suits someone like me who really just wants an emergency type phone . the calls will cost proportionally more but if you make very few calls that does not matter.
    .As i am in the US I bought a virgin phone as if i pay $100 a year it keeps it active..however i now have over $ 300 credit on it and will now have to pay another $100 just to keep it active. This is getting a bit silly! i am thinking of getting a t-mobile phone as think i have read that if you get to gold status ( put $100? on phone)that keeps your service for a year and then you only need to add $10 to keep it alive for another year? I would be grateful to find out if this is still true before i throw away even more money, but clear info is very hard to find. What is also frustrating is that with Virgin I cannot even get  texts through to several networks in UK, to use up some of my credit.I am hoping that T-mobile being GSM will have better compatability with UK. Is this likely?
     I do realise that i am not a normal user but do not think i am unique! i believe Tracfone does something which is meant to be the lowest level but even that is a “no contract’! $10 a month. $120 a year is not nothing ! In Uk would be maybe 10 pounds sterling (about $15) for this emergency phone for ever? Also are not charged for incoming calls in Uk so it is the caller who spends the money not the recipient.
    A lot of american things are wonderful but just think this “no contract” mobile/cell business isn’t!

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    • memenode

      I couldn’t provide this clear info you need about T-Mobile in US as I’m not in US, but as for contracts they don’t necessarily mean there is no subscription. It just means you’re not locked into one. You can cancel any time you want with no fuss whereas with something like a two year contract you have to pay the subscription for two years straight, and if you want to cancel earlier you have to pay a difference.

      Hopefully someone can clarify the specifics about T-Mobile in US.

      VN:F [1.9.22_1171]
      Rating: 0.0/5 (0 votes cast)
  • MB

    If I deactivate my pre paid phone, does my number get recycled immediately or does it remain out of commission for a period of time before getting reassigned?

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
Related Posts

  • Pay as You Go Cell Phones

    Sometimes called pre paid or prepay cell phone plans, Pay as You Go Cell Phones are usually used in specific types of mobile phone calling plans. Unlike standard mobile phone calling plans that charge a set monthly fee for a specific amount of calls, pay as you go cell phone calling plans only require the consumer to purchase calling minutes when they would like to make a call. Getting Started with a Pay As You Go Cell Phone Calling Plan It is important to note that in order to join a pay as you go cell phone calling plan, you [...]...


  • How Do Prepaid Phone Cards Work?

    As more and more people switch to cell phones for communication, many people are opting to use prepaid phone cards rather than signing up for a contract with a service provider. Prepaid phone cards allow users to purchase temporary plans ahead of time and use their minutes from wherever they are without having to worry about overdraft charges and hidden fees. Aside from cell phones, prepaid phone cards also work with pay phones and allow those users to access minutes from their phone card rather than paying a fee on the spot and then having to insert extra money to [...]...


  • Unlocked Cell Phones

    To understand what an unlocked cell phone is, it is important to first understand what a locked cell phone is. A locked cell phone is one that can only be used with one cellular service provider. In contrast, an unlocked cell phone can be used with any cellular service provider. When a cell phone is locked, it only recognizes a SIM (Subscriber Identification Module) card that the cellular service provider that the cell phone is locked to (a SIM card is a microchip that stores data and provides cellular service once inserted into a cell phone) issued. With regards to [...]...


  • How Do I Setup MMS on My Mobile?

    MMS, Multimedia Messaging Service, is a widely used communication channel over mobile phones to send and receive multimedia like images, ringtones, and videos. Most modern mobiles phones are MMS enabled. To use MMS service on your mobile phone, you need to do 2 things: Activate the MMS Service from your Service Provider. Upon activation by the Service Provider, you will receive MMS settings which need to be setup in your mobile phone. The process to setup MMS in your mobile phone will differ from one Service Provider to another. Every Service Provider will have different, Access Point Name (APN) Proxy [...]...


  • How Do Tracphones Work?

    As many people are fed up with their cell phone providers, a new trend has opened up for tracphones. A tracphone, or TracFone, is a prepaid phone that gives you the accessibility of a contract plan without the commitment. Tracphones have become much more popular in the past few months as more people are finally ending their two year contracts with their cell phone providers and switching to prepaid plans. To properly define how tracphones can help you, this article will analyze the various features that tracphones have to offer. No Commitment The main feature of a TracFone is that [...]...


Home » Telephony » Mobile Telephony » How Do Prepaid Cell Phones Work?