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printed July 28, 2014
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Prepaid

Paid in advance.

In the world of mobile phones, prepaid is an alternative to the traditional post-paid type of service plan.

Traditional post-paid service generally requires passing a credit check. Also with post-paid, a monthly bill or invoice is issued to collect the present month's fixed fees in advance, and the past month's variable fees after the fact.

Typical post-paid plans include a preset amount of minutes. If a greater amount of minutes are used, significant "overage" charges may be assessed. The customer is often not notified of overage charges until they receive an invoice weeks later.

In contrast, pre-paid is an option for credit-challenged customers, or customers who prefer to avoid the risk of overage charges. With pre-paid, minutes must be purchased in advance and credited to a balance of minutes. When the balance of minutes run out, no more calls can be made, preventing the customer from incurring a debt.

Blocks of airtime minutes purchased for a pre-paid account may have an expiration date.

See: PAYG

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