What’s a prepaid plan?

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Prepaid service plans require payment in advance for a specific service, allowing consumers to control usage and manage costs. Examples include cell phone plans and prepaid natural gas. While per-minute rates may be higher, it can be ideal for low volume users or those with credit issues. Competition has led to lower fees and open-ended contracts, allowing customers to switch providers without penalty.

Prepaid service plans are commercial service plans that require payment to be made in advance to receive a service offered by a specific vendor or vendor. Sometimes called a pay-as-you-go plan, the prepaid service plan allows the consumer to actively control their use of the service offered. This, in turn, makes managing the overall service cost from one month to the next much easier.

One of the most common examples of a prepaid service plan is with cell phones. Service plans of this type generally require the subscriber to purchase their cell phone and select and prepay for a certain number of airtime minutes. These minutes can be used to make and receive phone calls or to send and receive text messages. Today, there are a small but growing number of payments as mobile service providers also offer limited Internet access.

In some countries, it is also possible to make use of a prepaid service plan to secure natural gas for heating and cooking purposes. Suppliers supply the natural gas when the customer pays for the order in advance. Generally, this type of prepaid natural gas plan is available in rural areas rather than cities.

When it comes to a prepaid cellular service plan, the actual per-minute rate charged is usually higher than subscription plans that offer a bank of minutes per month for a low price. However, for someone with credit issues or who just doesn’t use cellular services very often, going with a prepaid service plan might be the ideal approach. Anyone on a tight budget can carefully monitor their usage and ensure they don’t exceed the amount set aside to buy minutes in any given month. Low volume users can sometimes purchase a small amount of minutes and have no further cell phone charges for two to four months.

Selecting the correct prepaid service plan can take some time. As more providers have begun to offer cellular and other services using a prepaid platform, competition for these services has increased significantly. This has led some vendors to pay as they go in to attract and retain customers, while others have simply lowered the per-minute fee charged to customers. As required service plan contracts with prepaid services tend to be open ended, a customer can always switch providers without fear of paying penalties for choosing another provider. This means that prepaid services often rely on a combination of quality service and good rates to keep growing.

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