What is a 'Pay As You Go' Cell Phone Plan?

The best way to define a 'pay as you go' cell phone plan is to first define a standard plan.

Standard cell phone plans have their perks, however, over 'pay as you go' plans. They often include free weekends and evening calling; meaning calls made during this time do not count towards your allotted minutes. For a small fee you can add options too, like free calling to any other cell phone that uses the same service; or free calling to certain cell numbers on other services -- friends or family members. Carriers have their own combination of features to choose from. In fact these plans can present so many options and contingencies that some people can find it confusing.

Finally, standard cell phone plans usually offer a high quality free phone with the plan or more expensive phones at deep discounts. This plan is probably the way to go for anyone who uses a cell phone more than 90 minutes every month.

'Pay as you go' plans work completely differently. For starters there is no monthly fee or contract and you don't need a credit card. Instead you can buy a phone card from the market which is like giving the carrier money towards your account.

Cell phone minutes are deducted from your available balance. If the balance reaches zero before 90 days have expired, you will need to buy another phone card to add more credit to the account before you can make additional calls. This is why it is called 'pay as you go.' If, on the other hand, 90 days passes and you haven't used all your credit, you will need to add $20 dollars anyway to keep the phone active, but your existing balance accumulates. You don't lose it if you don't use it!

If you do have a credit card you can opt to have the carrier keep it on file and automatically debit it every 90 days to save you the trouble of remembering. Optionally you can "top off" the account yourself anytime by simply accessing the top-off menu on your cell phone.

The advantages of a pay as you go plan are no contracts, no credit card requirements, and no monthly fees. Minutes are typically more expensive, however, plus you must buy a phone and there are normally no perks. Free weekends and evenings might be offered for short periods of time as promotional campaigns but as a general rule these plans tend to be very straightforward.

Source:

http://www.wisegeek.com/what-is-a-pay-as-you-go-cell-phone-plan.htm