Pay-as-you-go prepaid plans are just what they sound like. You buy a phone, and then buy service (in set amounts of minutes or dollars) as you need it, refilling the card at grocery, convenience, drug and discount stores or using your credit or bank card to add refills over the phone or Internet.
Monthly prepaid phone plans can be more convenient. With these, you pay a set amount every month, depending on your minutes and data allotment (if any), just like a traditional postpaid cell phone plan. However, there is no credit check or contract, and you can cancel without penalty at any time.
Estimate your minute usage. If you're a frequent cell phone user, you might save money by choosing a prepaid plan that allows unlimited calls, texts and data for a set monthly fee. Less frequent cell phone users might be better served by plans that let you buy time by the minute, and that offer long expiration dates (some are as long as one year).
Ask friends and neighbors. Those who live and work in your neighborhood can tell you how frequently they experience outages, busy networks or dropped calls. Once you gauge satisfaction, check carriers' websites for promotions, shop their retail stores and call them to see where you can get the best deal.
Check the coverage area. Sites such as OpenSignal and Sensorly (see Our Sources) let you search for service and even cell towers by zip code. Maps, which are powered by data downloaded by users, are constantly updated. Information specific to prepaid carriers is relatively sparse, if supplied at all, but coverage maps for the underlying carrier can be helpful.
If you travel frequently, be sure to choose a wireless carrier that lets prepaid customers roam. Most prepaid wireless carriers let you make calls when you're outside their area, but a few charge roaming fees, which may become an issue in rural areas. Some carriers don't allow roaming at all. If you are frequently in remote areas, carriers that use AT&T or Verizon generally perform best outside of major cities and away from major roads.
Check the terms, since no two plans are alike. Some require monthly or daily usage fees, and minutes expire after a certain period of time, from 30 to 365 days. Many plans let you roll over minutes by adding funds before existing minutes expire (topping off).
Read the fine print on unlimited prepaid plans. For example, data might be unlimited, but go over a certain amount of usage and your 4G/LTE speeds will be reduced to 3G or even 2G.
Extra services can add up. Most prepaid plans don't charge anything extra for nationwide long distance, roaming, voice mail or caller ID. However, many do charge extra for data access, international long distance, text, and picture and video messages (although unlimited prepaid plans often include this) as well as games, music or ringtones.
The idea of refunding unused data didn't originate with Republic Wireless (covered in our section on the best monthly prepaid plans). Google's Project Fi (Est. $20 per month and up) was the first to offer that concept. Though you buy a bucket of data in advance, any that goes unused is refunded back in the form of an account credit. Like Republic, Project Fi will hand off connectivity to Wi-Fi from its cellular partners whenever possible to keep cellular data use low.
Note that we said partners (plural) above. That's because Project Fi is the only cellular provider that simultaneously uses two networks -- T-Mobile and Sprint -- automatically switching service to whichever one provides the strongest signal at a given location. There's a $20 base charge for unlimited talk and text. Data is billed at $10 per GB per month, and you can pre-buy allotments sized to meet your expected needs, up to 10 GB. Don't worry if you overestimate or underestimate your data requirements; unused data is credited back to your account, while excess data is billed in the following month. Perks include free mobile hot spot usage, free international texting, 20-cent-per-minute international calling and international data usage that's billed at the same rate as domestic usage in more than 120 countries.
Project Fi is still too much of a work in progress to make it a consideration for many users -- for now. The program is in public beta and only open to subscribers by invitation, with a waiting list that's several months long as of the time of this report. It only uses a single phone, the Motorola-made Google Nexus 6 ($490 and up), a capable but very large device (more information can be found in our report on smartphones). User feedback in forums indicates that there are still some bugs to be worked out, but Project Fi is very much worth keeping an eye on. The concepts behind the service (multiple cell phone networks, Wi-Fi connections via secure virtual private networks, refundable data allotments and more) could play a role in shaping how prepaid and other cell phone plans will look in the future.
Elsewhere in this report: