If you want a cell phone but hate commitment or contracts—or don’t talk enough to justify paying make a monthly fee—a prepaid cell phone might be just what you need.

Prepaid Cell Phone 101
Here’s how prepaid works: You buy a starter kit that includes the phone, a charger, possibly one or two accessories and a small number of free minutes to get you started. You can buy prepaid starter kits at major retailers, convenience stores or through online outlets. You then add minutes by buying refill cards at the store, online or by phone.

The upside: no commitments, overcharges or credit checks.

The downside: Rates are higher on a per-minute basis than traditional plans, so prepaid isn’t a good choice for people who use their phone a lot.

Bottom line: You get a cell phone with no contracts and no whopping bill at the end of the month.

Who Needs It?
Prepaid phone are especially good for:

  • Younger kids who just need a phone for emergencies and the occasional call to their parents.
  • People with bad credit (or no credit) who might not get approved by a traditional provider.
  • Teenagers on a budget who might exceed time limits on traditional plans, incurring overcharges.
  • Seniors who want to travel with an emergency phone.
  • People who often misplace or accidentally damage cell phones.

Watch the Expiration Date
With prepaid phones, timing is everything. Once you add time, your minutes expire after a certain period (usually 30 to 90 days). If you add more minutes during this period, your previous balance will carry over to your new expiration date. However, if you fail to recharge by the expiration date, you lose your service and any existing minutes you had. Some carriers allow a grace period, during which they hold your number (but you lose your existing minutes, and won’t have service until you recharge).

It can be a pain to remember to add minutes every 30, 60 or 90 days, so several carriers offer deals where you can buy a one-year card which will preserve your service for a year. Most prepaid carriers also offer an “auto-add” option: You keep a credit card number on file, and they will automatically add minutes to your account when your balance runs low or is about to expire.