Prepaid Wireless: Finding The Best Bargain

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This story was written by CNET's Marguerite Reardon

After the economic meltdown over this past year, many Americans are looking for ways to cut back their monthly expenses. And prepaid wireless plans offer a great alternative to expensive contract plans.

Traditional prepaid services or pay as you go services allow people to buy their own phone at full retail price and then put a certain amount of money in an account that is deducted based on usage. Some plans offer buckets of minutes for a set price, and some allow people to just put however much money they want in their prepaid phone accounts. These plans allow people to know exactly how much they are spending each month, and if they run out of minutes or money in their accounts, they simply add more online, over the phone or at a retail location.

These plans differ from post-paid plans, which offer buckets of minutes for a set price, and then bill customers at the end of each month, sometimes resulting in surprisingly high phone bills or excess charges for services that were never used.

Prepaid services have long been popular in Europe and other parts of the world, but in the U.S. these services have traditionally served only niche markets. But now prepaid is gaining steam in the U.S. And consumers of all stripes looking for good deals with no service contracts are considering canceling their post-paid services and going to prepaid.

Ideal candidates for prepaid services include people who use their phones rarely to call friends or family when they are out and about or who only own a cell phone because they think they may need it for an emergency. My 66-year-old, retired father falls into this category. Teen-agers are also prime candidates for prepaid services, especially for plans specific to text messaging, such as Virgin Mobile's Texter's Delight or T-Mobile's Sidekick plan. These plans offer loads of free texting and cheap per minute voice charges.

And now a new category of prepaid services has emerged that will likely appeal to traditional post-paid customers, who talk, text, and access the Mobile Web a fair amount each month. Several carriers including Virgin Mobile, Boost Mobile, MetroPCS, and Leap Wireless's Cricket offer low-cost unlimited plans that include voice calling, messaging, and unlimited Web surfing. And the beauty of these all-you-can-eat plans is that customers aren't required to agree to a pesky one-year or two-year contract and risk paying expensive early termination fees.

While there are many benefits to prepaid, there are also some downsides. Typically, these services don't offer the coolest, cutting edge phones. In fact, MetroPCS is the only prepaid operator offering a plan for a smartphone, the BlackBerry Curve. And the fine print in these deals can make picking the right plan with the best value difficult.

There are some very good Web sites out there that can help consumers pick the best plan for them. The most comprehensive one I have found is called Prepaid Reviews, which rates prepaid options from 24 carriers. Consumers can view the pros and cons of each operator, track which phones are offered, write reviews, and read evaluations on several categories. Also, there's a tool that allows people to compare up to three carriers at once.

But for those looking for a quick look at what's available, I've selected some of the most popular plans from smaller providers to big carriers, such as AT&T, Verizon Wireless, and T-Mobile, to help readers begin to find the plans that best match their needs.

Click here to read the complete comparison breakdowns.

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