What Exactly Is a Prepaid Phone? The Advantages and Drawbacks of Disposable Phones

Nowadays, the majority of cell phone users are bound by a contract with a wireless provider. Prepaid phones provide a unique alternative.

Though gaining traction, prepaid phones are still in the minority, prompting the question: What is a prepaid phone? In this article, we'll explore these devices and assess whether they could be the right choice for you.

Understanding Prepaid Phones

Prepaid phones can be useful in the following situations:

A prepaid phone plan offers the essential features of regular cell phones without the need for a long-term contract or additional charges for exceeding the monthly limit. Plus, it's easy to sign up.

Affordable options are available at retail shops, electronics outlets, or discount stores — and even through major carriers like AT&T (formerly Cingular), T-Mobile, and Verizon, who now offer prepaid choices within their range of plans.

Prepaid phones (often referred to as 'burner phones') operate just like regular phones but without the commitment of a long-term contract and without some of the extra features.

You purchase a cell phone with a predetermined amount of service (data usage for a certain period). If you exceed your data limit, you can either buy more minutes immediately or within a specific timeframe. Alternatively, you can simply stop using the phone.

Benefits of Prepaid Cell Phones

The key benefit of prepaid services is the mix of independence and control they provide. With a prepaid phone, you're not tied to a long-term contract with fixed minutes per month, specific calling windows, extra charges for overages, or hefty penalties for breaking the agreement.

You're free to talk whenever you wish, as long as you need, until your minutes or data are used up. Plus, you avoid the burden of a monthly bill.

Whether you talk more one month and less the next doesn't affect anything, and unused minutes often carry over to the next month. Additionally, if you decide to change your plan, a prepaid phone allows you to make that change at any time.

Prepaid phones are quick and easy to purchase because they don't require a contract. They're available at many locations, ready to use right away, and even disposable. These benefits make prepaid phones an excellent choice for the following scenarios.

Parents of Teenagers

When you run out of minutes, you can no longer make calls or send texts, but emergency calls may still be allowed, and some phones can store incoming messages until you have minutes to read them.

Parents can buy an affordable phone for their teenager, along with a set amount of minutes or data. The teen is then responsible for managing their usage and paying for any extra minutes needed.

Occasional Cell Phone Users

If you only use your phone for emergencies and a few calls here and there, you don't need an expensive device or a complex billing plan. A prepaid phone could be the right fit, but make sure you're aware of any expiration on unused minutes.

Short-term Users

Since there's no contract, there's no need for a credit check or address, making it a great option for calls during travel. If you're abroad, you can get a prepaid phone number for the duration of your stay.

Trial Users

Before committing to a long-term cell phone plan, consider using a prepaid phone for a month or two to get a sense of your (or your teenager's) actual phone usage. This will help you choose a plan with the right amount of minutes and call times.

Young Adults and Others With No Credit History or Credit Card Debt

Purchasing a prepaid phone doesn't require a long-term contract or a credit check, making it an easy option for students with part-time jobs or older adults who don't use credit or have a less-than-ideal credit history.

3 Drawbacks of Prepaid Cell Phones

While prepaid phones offer numerous benefits, they can also present challenges for users. Depending on how often you use your phone, you may end up paying more per minute, which can be costly for heavy phone users.

With growing demand in the prepaid market, rates have decreased, and plans have become more attractive. For instance, prepaid provider Boost Mobile offers a flat-rate, monthly unlimited talk plan for $25 in some states.

In general, per-minute rates tend to be lower with traditional contract plans [source: TMCNet]. Below are a few other drawbacks of prepaid cell phones.

What Is a Burner Phone?

Prepaid phones offer a level of anonymity, which isn’t appealing to everyone — especially law enforcement agencies. In Texas, a state senator once proposed a measure targeting gang members who often use these so-called "burner phones."

Prepaid Cell Phone Plans

When you begin exploring prepaid cell phone plans, you’ll come across many different options. For instance, you can purchase a basic cell phone with standard service and simply add minutes as needed.

Alternatively, you can opt for a more advanced phone with additional features and services, and buy larger minute packages at a more affordable rate. You may also find prepaid phone contracts that combine aspects of both prepaid and traditional monthly plans.

Experts recommend starting with the plan, not the phone. Next, evaluate the service quality the plan offers in your area. Finally, whether you choose a true pay-as-you-go model or a monthly plan, scrutinize both the charges and the rates for minutes. These could include:

After selecting the plan type, your next step is to choose a provider. Let’s dive into that next.

Prepaid Cell Phone Providers

Prepaid cell phone providers fall into two categories: mobile virtual network operators (MVNOs) and traditional wireless carriers. MVNOs specialize in the prepaid market by renting network space from established carriers rather than maintaining their own infrastructure.

Some of the most notable MVNOs include Boost Mobile (a subsidiary of Sprint), TracFone (owned by American Móvil, a leading Latin American wireless provider), and Mint Mobile. Below are quick profiles of these companies, based on feedback from prepaid phone users through surveys and reviews.

Traditional wireless carriers have historically relied on long-term contracts for business, but now they are also diving into the prepaid market to compete for a share of this rapidly growing segment. Major providers such as AT&T, T-Mobile, and Verizon now offer prepaid plans, each with its own set of advantages, based on customer surveys and reviews.

International Prepaid Cell Phones

International calling with a prepaid cell phone is generally straightforward, especially when calling from the U.S. with an international plan. However, if you're traveling abroad and wish to make calls, it's best to explore other options, such as international prepaid phones, to avoid high fees or limitations.

If you're calling from the U.S., the process is simple: dial 011 followed by the country code, city code, and the phone number. For certain destinations, like Canada, Puerto Rico, or Jamaica, you can bypass the 011 code altogether for ease of calling.

When calling from abroad, the situation becomes more complicated, as you might face compatibility issues with your phone and the local network in the country you're in. This can make international communication more challenging if your device doesn't support the network technology in the region.

In the United States, cell phone networks rely on a variety of technologies to transmit data. Among these, only time division multiple access (TDMA) is compatible with the Global System for Mobile Communications (GSM), the global standard used across Europe, Australia, and much of Asia and Africa.

In many countries worldwide, users can purchase a single phone and easily swap out the SIM card when traveling between nations to maintain phone access without issues.

For those staying long-term in another country, a practical option is to buy a prepaid cell phone upon arrival. In most countries, incoming calls are free and unlimited, making it an affordable choice for visitors.