People can have cell phone service with or without a service plan. Most people sign up with a carrier for a certain level of service for which they pay a monthly fee. This package includes certain features, depending on the service level in the contract. They are then locked into this contract for a year or more, and have to pay the monthly fee whether or not they use the minutes or features. Most new customers receive a free or discounted price phone when they sign up with a carrier which is why many end up with complicated phones and features they will never use. Once they sign the contract they are obligated for a year or more. If they break the contract, they incur a penalty. Some of these penalties can be hefty.

Many people object to this kind of contract. If they still want to use a cell phone, they can buy a pre-paid cell phone. In this situation they buy the number of minutes that they want and prepay the amount. Depending on the carrier, they can prepay for thirty to one thousand minutes of phone time. Sometimes this comes in the form of a phone card that specifies the number of minutes on it. When they deplete the number of minutes that they have purchased, the phone just stops working. If the user wants to keep using a prepaid phone, they have to buy more minutes or another phone card. If they don't want to keep using prepaid service, they can throw out the phone since it won't work without the prepaid minutes. Prepaid phone service is becoming so popular that many cellular carriers are beginning to offer the service. The advantage of the prepaid cellular phone is there is no contract for a year that results in a penalty if you cancel. With most prepaid plans the user can stop using it by not buying more minutes when his run out. He pays no penalty for not renewing and does not pay monthly service charges for features he does not use. This is one of the reasons for the popularity of these plans.

Because of prepaid cell phones it is possible for people to have cell phone usage without a contract with a carrier and monthly bills. The prepaid charges are higher than the regular carrier contract charges, but for many people it is worth it.