Prepaid cell plans: 3 more gotchas

As the popularity of prepaid cellular has picked up steam during the recession, we've been warning about some pricing pitfalls that shoppers should watch out for. Here are three more potential problems that can eat into the real dollar savings you can score with prepaid vs. contract cellular service, and what you can do to avoid getting snagged:

Fine print about expiration dates on minutes. With Virgin Mobile's "Pay as you go" plans, you may be tempted to buy a 1,000-minute pack for $50 to get a super-low five-cents-per-minute rate. That's great if you use that many minutes in a month, but not so good if you're less of a yakker, because these minutes expire if not used in 30 days. Expiration dates are common on prepaid minute bundles, though some carriers are more liberal than others. With T-mobile to Go, for instance, there's a one-year expiration date if you buy 1,000 minutes for $100; packages of up to 400 minutes have a 90-day expiration.

Watch the expiration dates and don't overbuy minutes in pursuit of the lowest per-minute price. With most carriers, unused minutes generally roll forward if you add more minutes to your account before they expire, but if you don't talk a lot, your effort to roll the expiration date forward could end up creating an ever-growing mountain of unused minutes.

Mind boggling minute-bundle pricing. Tracfone does a good job hiding its minute-card prices on its Web site. We eventually found them. Once you get there, look at the gauntlet you'll have to run between the number of days your purchase keeps your phone in service, the purchase prices of each bundle, and the unit price you pay per minute. For example, say you only want 60 minutes of airtime: You can buy that amount for $19.99, which also keeps the phone active for 90 days, but the price per minute is an astronomical $0.33. The only instance in which that might make sense is if you carry a phone for emergencies but rarely use it. In that case, you're buying peace of mind for about $7 a month, rather than paying a monthly bill of $30 or more for a phone you'll rarely use.

We prefer the no-nonsense pricing on Net10's prepaid minute bundles, which in almost all cases works out to 10 cents per minute whether you buy 200 minutes (with 30 days service) or 2,000 minutes (with one year of service). (Net10's 4,000 plus 1,000 bonus minutes card for $400 gets you down to a price of eight cents per minute.) Ironically, Net10 is a subsidiary brand of Tracfone.

If you want to deal with Tracfone, buy bulk minutes and long-term service. You can get the Tracfone per-minute price down to 16 cents, if you pay $124.99 for an 800-minute card, which includes a $24.99 fee for "double minutes for life," meaning you get double the minutes on every subsequent card purchased. But you can buy the same number of minutes from Net10 for $80, a savings of $45, or 36 percent.

Overpriced minutes. Verizon Wireless' "Prepaid Basic" plan may attract you with its zero daily access fee, but it extracts a huge 25-cents-per-minute fee. Ditto for AT&T's "GoPhone Pay as You Go Simple Rate Plan" prepaid. Virgin Mobile's prepaid "Pay as You Go Basic" plan charges 20 cents per minute, as do Tracfone's prepaid "Value plans."

Never pay 20 to 25 cents per minute for prepaid. Check for better deals elsewhere. Depending on how many minutes you use per month, you can find rates that are truly as low as 5 to 16 cents per minutes, as described above. Also, don't be fooled by 5- and 10-cents-per-minute rates that also come with daily access charges or per-day-used charges; that boosts your true per-minute cost.—Jeff Blyskal