What Is a Pay As You Go System?

A pay-as-you-go system lets you pay in advance for your cell phone and is also known a prepay. This is a good option for someone who has bad credit, worries about overages, doesn't want to sign a contract or doesn't use a cell phone often.

Providers

Companies that carry pay-as-you-go phones include T-Mobile, Verizon, AT&T and Tracfone. Each company offers different phones and plans to choose from.

Plans

The basic plan allows you to purchase minutes and, as you run out of minutes, you can add credit to your account. Some carriers let you pick a plan that offers a set fee for a certain number of minutes per month, and you can add minutes at the end of the month if you run out.

Advantages

Pay-as-you-go plans don't require you to sign a contract or require a credit check. You also don't have to worry about going over your allotted minutes.

Disadvantage

If you run out of minutes on your pay-as-you-go phone, you can no longer send or receive calls until you add more minutes. However, you can still place calls to 911 in case of an emergency.

Tip

Make sure to regularly check how much credit you have left on your phone so you don't run out of minutes at an inconvenient time.