Prepaid cell phone plans offer several advantages over contracts, including flexibility to start and stop the plan, no credit check and possibly saving money. People who often benefit from prepaid plans include parents, infrequent cell phone users and people with poor or no credit history.
With a cell phone contract, the customer agrees to pay for a cell phone plan for a set length of time, typically one or two years. With a prepaid plan, the customer pays up-front for the features, including minutes, messaging and data, and only commits to what he purchases.
Unlike contracts, prepaid plans don't require a credit check. Someone with poor or no credit history, such as young adults or those with credit card debt, may be denied for a cell phone contract.
While features on a prepaid plan typically cost more than on a contract, the customer benefits because he only purchases what he needs. With contracts, he purchases a set amount of every feature. If he doesn't use that amount, he wastes money. If he goes over that amount, he must pay extra.
Parents benefit from prepaid plans because they can purchase these plans for their children without worrying about the children going over anything. Once the plan runs out of minutes or messages, that feature is unavailable. This also teaches children how to manage their features.