While many wireless services are sold in two- or three-year plans called postpay contracts, others are sold month-to-month and are paid on an on-going basis. This is considered a prepay plan. There are advantages and disadvantages to each of these services and it's important to be aware of all the facts before making any monetary commitments.
Prepay
The most common prepay wireless plans only allow you to make calls in your local area, and restrict you from making or receiving any long distance calling. While it is possible to get long distance coverage, it is much more expensive than purchasing a postpay plan. Prepay allows you to know exactly how much you are going spend each month and helps you control your monthly budget.
Postpay
Postpay plans require you to submit financial documents that prove you can pay the allocated monthly bills. A company adds up all the expenses and services that you have incurred over the past month and mails you a monthly statement with the total amount due.
Advantages
The advantages to using prepay are that you don't have to sign a contract and there is no long-term commitment. There are no monthly bills that you have to worry about, and no credit checks are needed. The advantage of using a postpay plan is that if your phone is lost or stolen, the device can be shut off by your provider, preventing the culprits from using and abusing your phone.
Disadvantages
The disadvantage of using prepay service is that if you don't use the phone for a long period of time, it's possible to lose the money in your account. Some prepay plans require you to pay per minute and if you don't keep track of your usage, you can run out of minutes. A disadvantage of having a postpay plan is that if you cancel the service before the contract has been fulfilled, you can be subjected to early termination fees that can end up costing you hundreds of dollars.
Purpose
The purpose of your wireless service is going to have a dramatic effect on which plan you choose. If you are buying a phone for emergencies only, then using a prepaid plan may the best option for you in the long run. A postpay plan is great if you want to be part of a family plan, calling all over the country, using it for business or if you plan on texting and calling on a regular basis.
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