If you are shy of commitments, a no-contract, no-penalty cell-phone service may be in order, particularly if you are not comfortable with having a credit check run and giving away your personal information. Traditional mobile phone service plans require a one- or two-year commitment, locking you into the plan by offering you a wireless phone for pennies on the dollar. One trade-off is that your no-contract cell-phone plan requires you to buy your phone upfront without the long-term contract subsidy.
No contract means no commitment; you can cancel at any time without a penalty. However, you will not get a refund of any fees you prepaid. This type of plan can great if you're not sure what long-term plan you prefer, or if you anticipate a move in the near future. Not all wireless plans and phones are transferable from one locale to another.
No Cancellation Fee
Contract cellular service providers charge a steep early cancellation fee, often to offset the cost of the $400 cell phone you got for 99 cents. This fee can be in the hundreds, but it doesn't apply to a no-contract cell-phone plan. When you sign up for a no-contract plan, you buy your phone up front, and you prepay for the services you need. Plenty of phones are available for under $50 -- particularly if all you desire from your phone is the ability to make and receive phone calls -- so getting a no-contract plan needn't entail huge upfront costs.
No Personal Information Required
If you covet your personal information, a no-contract plan essentially only asks for your money or a means of getting your money. No social security number, no license number, no credit check. A no-contract plan can be a good option if you're buying for an older child or teen and you don't want to give out this information. The plan can easily be cancelled if the phone is lost or stolen without compromising any personal information, other than what is easily accessible from the phone itself.
Companies that offer contract plans often have one or two noncontract plans available, giving you the support of a major wireless provider without the commitment. Prepaid plans enable you to buy the minutes, text and data up front by funding a prepaid card or account. As you use the phone, the fees are deducted from your banked funds. You can load the card as needed. For example, you might pay $20 for 60 minutes to be used within 30 days. Keep in mind however, that in most cases you will lose what you don't use; you will not get a refund and the minutes or the money will not roll over to the next month.
Prepaid Monthly Unlimited
Another no-contract cell phone plan is based on a monthly set rate for unlimited use. This plan allows for unlimited minutes, texts and data on the provider's network. There may be additional charges for roaming. You are generally billed on a monthly basis for this type of flat-rate fee service plan. If you don't prepay for the following month, you lose your service. There is also no carryover of unused minutes and data.
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