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A pay-as-you-go mobile phone, also known as a prepaid phone, is a kind of handset that requires the user to purchase credit from a phone operator in advance. It is a reasonably priced alternative for those who find traditional postpaid plans too costly or don’t like being tied down to a contract. To help you determine which one is more suitable for you, here is a look at the major benefits and drawbacks of pay-as-you-go service.

Advantages


1. No contract is required
The most obvious attraction of pay-as-you-go service is that it does not require you to join a multi-year plan. You can jump from one carrier to another any time you want without having to wait until your contract is up, or to pay a pricey early termination fee.

2. Easy to control spending
A prepaid plan gives you a simple solution to budget control. Instead of paying a fixed bill every month for a pre-determined amount of minutes, you can purchase minutes as much or as little you want, depending on your usage. It is particularly cost effective to light users and people who only need a basic phone for emergencies.

3. No credit check
Since credit checking is not a must for pay-as-you-go service, people who don’t have established credit or whose credit history is not presentable can get a non-contract phone without paying a deposit. It is simple and convenient. All they have to do is buy a prepaid phone and credits, insert the given SIM card, and then they can start calling.

4. Never worry about overage fees
Customers tied to a traditional plan will have to pay additional charges if they exceed their monthly allotments of voice minutes, text messages and data megabytes. But with a prepaid phone, there is no need to worry about overage charges at all. Since you have to buy credits in advance, you will never accidentally use more minutes than you intended to. This could be very useful to parents who want to prevent their children from spending too much time and money on their handsets.

Disadvantages

1. Need to buy credits in advance
Using a pay-as-you-go mobile phone could be inconvenient sometimes. You have to check your credit constantly to make sure that there are still minutes left on your SIM card, or else you won’t be able to make calls and send messages when you need to.

2. Limited phone choice
Compared with those on contract deals, there are not many choices for prepaid mobile phones. They tend to be cheaper but have limited features. So if you want those fancy high-tech smartphones that are new on the shelves, pay-as-you-go service may not be your choice.

3. No subsidy from carrier
Prepaid phones are generally more affordable, but customers have to pay the full retail price for the device when they buy it. On the other hand, if you go for a postpaid plan, the carrier will offset some of the cost of the phone by offering it for an up-front discount, which means you can pay less right now, and make up the cost of the phone later via your monthly payment.

4. Expiring service
Pay-as-you-go phone owners should be aware that the prepaid minutes they buy have an expiration date. They have to use up all their purchased credits within a certain period of time, or the credits will be lost and can’t be used anymore. Besides, you may also need to top up your account balance on a regular basis to extend the activation period.

5. Extra fees and higher call charges
Non-contract customers may be charged with other unexpected fees, such as a daily access fee and a roaming fee. Also, the net cost per minute of monthly prepaid plans is usually higher than that of contract plans, which means for the same call, you have to pay more when using a prepaid phone instead of a postpaid one.

Before you decide to get a pay-as-you-go or a contract phone, be sure to consider all the factors we mentioned above and think carefully about what you really need.