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There are advantages and disadvantages to both prepaid and monthly billed cell phone services.

The advantages of monthly billed cell phone services are:

You pay the bill once a month.
Often you are offered a free cell phone.
Since it is a credit contract, it can build up your credit rating.
Some providers let you upgrade your phone for free after you've had it for a while.

The disadvantages of a monthly billed cell phone service are:

Generally, they require a two year contract. If you for any reason you want to discontinue with the plan before the contract expires; you are often charged a very high penalty fee.

If you don't use your cell phone on a regular basis, it could actually cost you more per month than a prepaid. You could actually be paying for minutes that you never use, if your carrier doesn't have roll over minutes.

If you don't have good credit to start with; the cell phone company will charge a (sometimes large) deposit.

Because this is a contract plan, you have to be 18 or part of a family plan to get monthly billed service.

If you go over your monthly minutes, they start charging an over the limit fee. This could really run up your bill.

The advantages of prepaid service.

There is never a deposit. (Sometimes there is an activation fee but monthly service often charge this fee as well.)

There is no credit check. This is not a contract service. You are paying as you go.

This is an ideal phone for parents to buy for their children because they can only use the minutes that pay for. This means no unexpected charges.

Since this isn't a contract service, a teenager can buy a prepaid phone without a parent.

You pay as you. You buy the minutes that you need or that you can afford.

You are able to change carriers at will.

The disadvantages of a prepaid phone:

You pay as you go. If you run out of minutes and you have no money, you have no phone.

It can cost more if you are a frequent user. Plans charge anywhere from 10 cents to 25 cents per minute and may have connect charges as well as other additional fees.

You can't establish or build credit with prepaid service.

You can't upgrade your phone without purchasing a new one.

As you can see their are advantages and disadvantages to both types of cell phone service plans. To determine which one is right for you ask yourself:

Can I afford the monthly fee?
How often will I use the phone?
Do I want to be locked into a service contract?
Who will be using this phone and why?

Once you determine your needs and financial abilities; you can choose the best plan for you.

Learn more about this author, Cynthia Harlan.
Click here to send this author comments or questions.

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