Sign up for a phone on a monthly contract and you'll pay a set fee every month for a pre-determined amount of texts, minutes and data.
The cost of the phone is then spread out over the course of the contract.
Buy a pay as you go phone, though, and you buy the handset outright and you're free to add credit when you want to or when they feel you need more.
Pay as you go customers can add credit by buying a voucher in a high-street store. Alternatively, they can call their network provider on a freephone number and pay for airtime directly with their credit card.
Adding credit to pay as you go mobile phones
Using a voucher will typically require the owner of the pay as you go phone to make a free phone call to their network and enter a specially generated number.
The newly purchased airtime will then be added to their pay as you go mobile phone instantly, allowing them to make calls and send texts straightaway.
Some networks that offer pay as you go mobile phones apply a time limit during which time the customer must use up the airtime they have added, while others stipulate a cut-off time after which point the voucher becomes invalid.
However, some carriers do not impose time limits on pay as you go mobile phone usage at all.
Once owners of pay as you go phones run out of airtime, they will need to top up again.
Until such time as they add credit to their pay as you go mobile phone, they will still be able to receive calls though.
They are usually also able to pick up voicemails, although this varies between providers.
Pay as you go deals: why go PAYG?
Pay as you go mobile phones can offer a host of advantages over contract mobile phone deals.
First and foremost, when you choose a pay as you go mobile phone you are free from lengthy and sometimes very expensive contracts.
That means that if you’re not happy with the service you can walk away instantly.
Alternatively, if a new cut-price tariff appears, you’re free to take advantage of it straightaway.
Just as important is that you can upgrade your pay as you go mobile phone whenever you like.
This is in contrast to some 24-month contract deals when a mobile phone can be of out of date by the time you have finished paying for it.
Opting for a pay as you go mobile phone also means that you only pay for the calls you make.
That means you won’t suffer the frustration of feeling like you’ve wasted money when you’re left with lots of unused minutes and texts at the end of the month.
Or that you’ve paid for a service which you barely make use of
This makes pay as you go mobile phones a brilliant option for users who do not require hundreds of minutes of talk time every month, but need a mobile phone so they can be reached by their friends and family.
Another advantage with pay as you go mobile phones is that you know exactly how much you’re spending on mobile phone calls, texts and other services.
That means that you can cut down on your usage accordingly if you’re overspending.
Pay as you go phones can now be bought for as little as £5.
Consequently, they are an excellent choice for people who do not feel they need the high-tech functions that feature on more expensive models.
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Pay as go mobile phones you versus contract mobile phones
Unfortunately, call and data charges and tariffs tend to be higher with pay as you go phones than with contract mobile phones, so you can often pay much more for making the same call.
There is also the disadvantage that pay as you go phones require that you buy the mobile phone outright. This means that your initial costs are higher than if you were signing up for a contract.
Furthermore, pay as you go mobile phone owners can run a higher risk of running out of credit than consumers who have opted a contract mobile phone deal.
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