Why prepaid minutes come with an expiration date

When you look through our prepaid cell phone reviews, you’ll notice a section titled “Earliest Minute Expiration.” Yes, when you buy prepaid minutes, they’re not yours forever. Some might be outraged at this, arguing that this is just another way the cell carriers squeeze every last penny out of you. However, like most prepaid consumer issues, the carriers have a perfectly good explanation. We turn to Christina Tynan-Wood of InfoWorld, who spoke to Virgin Mobile about the issue.

“We do this because of the cost of maintaining accounts that are no longer active,” explains Corinne Nosal, a spokesperson for Virgin Mobile. “Our research tells us that people who have no activity on their account for over 90 days are no longer using the phone. Other companies have this same requirement.” She points out Virgin Mobile customers also have the option of buying service by the minute: You can pay $6.99 a month and 10 cents a minute. The $6.99 a month fulfills the top-up requirement. Or you can pay $90 and have a year to use the money in the account. “If toward the end of the first year, you still have $45 in your account, for example,” she explains, “top-up with $90 and the $45 will roll forward. You now have a balance of $135 in your account against minutes for the second year.”

Nosal hits one of the saving graces of the expiring minutes practice. If you add more money to your account, all of your minutes expire at the new date, not your old one. So if you have 500 minutes that expire in two days, you can top up and extend the expiration to a new date.

Tynan then finds the further inefficiency in this: what if you just want the phone for emergency purposes? Wouldn’t it make sense to have a special program for these users? I suppose that since they don’t bring in much revenue, and actually bring down a company’s ARPU, they wouldn’t be too keen to that from a business standpoint.

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4 Responses

1. Christina Says
   

   Thanks for mentioning my InfoWorld blog!

   
   Posted on October 15th, 2008 at 8:10 am
2. BEV Says
   

   I want a prepaid cell phone for emergency purposes only without an expiration date. These cell phone companies are whores!They just want your money!

   
   Posted on May 8th, 2010 at 7:31 am
3. Junior Says
   

   Of course the corporate whores will provide an ‘explanation’. But does it make sense? What costs are associated with maintaining an account? Nothing more than the standard cost of equipment that these greedy bastards maintain anyway for next to nothing with the hundreds of dollars a month some people pay for their phones. Maybe if they didn’t spend half their profits trying to brainwash customers (I am not a ‘consumer’) with advertising, then they could provide a little actual value. Bev is right, corporations do not exist to provide a service, or value, or help you in any way. They exist to make money, as much as possible as quickly as possible. That cannot be denied.

   
   Posted on May 18th, 2011 at 9:59 am
4. Jason Says
   

   This is the biggest load of bullshit anyone will every tell you. “Account maintenance” costs them next to nothing. You’re just a few entries in a massive enterprise database.

   Claims of such are always proved to be nothing but a massive scam in court. That is why it is illegal to have a gift certificate that degrades or expires in California.

   In fact, they make money off of your ‘account’ because they’ve got a record of your information for marketing. They resell your personal information to other marketers. Also, if you let your account expire, they keep you in their database forever. Call later and reactivate your account. You’ll still be in the system.

   
   Posted on June 19th, 2011 at 10:34 pm

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