“Pay As You Go” Cell Phones

Reviewed: February 04, 2016
By FinanceWeb

Pay as you go service is the alternative to contract cell phone service and other plans. Rather than making a multi-year or even annual commitment, consumers purchase cell service as they need it. Some providers allow customization of the monthly set-up such as adding unlimited international features for limited periods.

Tracfone Model

Tracfone was an early success in the pay as you go cell phone service sector. Tracfone’s pay as you go option uses payment cards that consumers pay to load with telephone minutes. In this way, the consumer sets the amount of usage by the amounts of minutes purchases. One simply pays as one needs to go on using the phone. Tracfone offers incentives to encourage larger purchases of telephone time. They can charge more for usage when roaming away from a home area, and this can be as little as visiting a neighboring town.

Advantages of Pay as You Go

Pay as you go offers the most flexible approach for consumer budgets of any cell phone service. The consumer has total control over the amount that he or she will spend. The consumer may have to sacrifice value in the process as the price incentives point towards large and larger purchases. The greater values are in annual term purchases that sometimes multiply minutes and remove roaming charges

Disadvantages of Pay as you Go

The primary use of a cell phone may be to communicate when needed. The pay as you go model can leave the consumer temporarily out of a cell phone because he or she exhausts the prepaid minutes. This is not a restriction on transmission speeds or data transfer; it is a loss of basic cell service until one can fix the situation. This possibility means that the consumer flexibility comes at a risk that an occasion may arise in which basic voice communication will not work.