Pay-as-you-go phone plans do not require users to sign extensive contracts with their service providers. Many standard mobile phone plans require users to sign a contract of up to two years. Users pay cancellation fees if they come out of the contract before the contractual period is over. For prepaid plans, the user only needs to purchase a compatible phone and calling credit to enjoy the services.
Prepaid plans have limited restrictions, compared to the standard mobile phone plans. This means that users do not have to disclose information such as name and address to the mobile service provider. Also, unlike standard phone plans, a consumer does not need to undergo a credit check or produce an ID to show that he is over 18 years.
Pay-as-you-go phone plans allow users to manage phone bills. Users only pay for the duration of minutes they have spent calling. In contrast to the standard mobile phone plans, there are no monthly bills or extra fees charged. The consumer knows exactly how much he has spent and can also make a monthly plan of how much to spend.
Standard mobile phone plans provide consumers with free mobile phones or phones at reduced prices upon signing a contract. With prepaid phone plans consumers have to purchase the phone on their own and purchase calling credit, and thus incur extra expenses.
To use pay-as-you-go phone plans you need to have instant cash readily available to purchase calling credit. This is disadvantageous if you do not have cash or if you are in a location where there are no calling credit cards. With standard phone plans you do not need to keep purchasing calling credit to use your phone.
Calling credit for prepaid mobile plans has an expiration. The period ranges between 30 and 90 days, after which the credit expires and cannot be used again. This can be quite a loss if you purchased credit, used some and the rest goes to waste.