In the cellular business there are two primary types of cell phone plans. They are either pre-paid or post-paid billing plans. Pre-paid cellular plans simply involve buying a certain amount of minutes using prepaid phone cards or simply calling the cellular phone provider and using your credit card to buy cellular minutes. Post-paid cellular plans usually require a one to two year contract and involve a monthly bill. There are advantages and disadvantages to both types of cellular plans which will be explained below.

Why would people want to use a pre-paid phone instead of post-paid? I’m sure you’ve heard the horror stories before which involved cell phone companies. One of the problems with a post-paid billing plan is that you will be locked into a one to two year contract and if you decide to cancel that contract you will be charged a few hundred dollars. This goes for each line or phone number you are associated with. So if you have a family plan with four different lines or numbers then they can charge you an early cancellation fee for each line which can add up to a hefty bill.

Also, imagine this scenario, let’s say you purchase a cell phone and get into a two year contract and later move to a different location or discover at your existing location the service is really not that good. Now you’re dealing with dropped calls or having to stand outside on top of a hill on your property to get decent enough reception to talk on the phone. Of course you can call into your cellular provider and tell them the service sucks, but 9 times out 10 they won’t take your word for it and send their “technicians" out to investigate and verify the service is good in that “general" location while it may not be very good in your immediate area. In other words, they’re not going to send a technician to your house, they’re going to check the greater vicinity to see if the coverage meets the bare minimum standards and 99% of the time it will. So the problem with post-paid is there’s a risk involved when dealing with coverage issues. With a pre-paid plan you could simply switch carriers if the service wasn’t so hot in your area.

The main problem with pre-paid is simply the cost of the minutes. You can’t buy the $10 dollar cards and expect to save money. If you’re going to go the pre-paid route then you really need to buy the $100 dollar prepaid cards because you’re going to get a better deal when you spend more money. I also wouldn’t recommend pre-paid phones if you’re constantly on the phone and not disciplined or have no desire to use your cell phone sparingly. Personally, what I like to do is use Skype or some other form of VOIP phone for long distance and general calls at the house, and then use a prepaid phone for emergencies or more important calls. Also if you have broadband internet you could take your laptop wherever you go and have cellular coverage almost anywhere depending on your provider.

Another reason why people go with the pre-paid plans is because a post-paid plan will require a credit check. If your credit is bad then they will either require you to pay a big deposit (deposit varies depending on how bad your credit is) or they will simply deny you their service.

As you can see both cellular plans have their advantages and disadvantages. The main thing is to weigh each option and decide what works best for your situation and how much time you spend on your cell phone.