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As the economy worsens, prepaid becomes more attractive

So it appears the U.S. economy is headed into recession, if we're not there already. What exactly this will mean for American families remains to be seen. But it likely means cutting of luxury costs. If we were still at the turn of the century, it might be easier to define cell phones as a luxury item. Yes, there were 97 million wireless accounts then, but considering business accounts, they weren't in the hands of the majority of Americans.

Fast forward to June of 2007, though, and we see a 150 percent rise in wireless subscribers. Not only that, but we're seen an increasing number of people ditching landlines altogether, opting for a cellular-only lifestyle. This is a major trend among college graduates (and even college students), meaning that the trend figures to continue. With T-Mobile pushing hard for their Hotspot @Home service, we're definitely entering an era where the landline is in decline.

So it's difficult at this point to call cellular phones a luxury. They're pretty necessary, and our dependency on cell phones is only going to grow. Still, some people cannot afford to completely ditch their landline. But what if they can't fiscally afford both services as we get deeper into recession?

Prepaid presents an attractive alternative to contract plans. Instead of paying a flat monthly rate for a batch of minutes which you might not use, prepaid offers a chance to only pay for the minutes you use. While the rate for prepaid minutes might be higher than it is for postpaid plans, the fact that you don't pay for extraneous minutes can make up the difference, and then some. Plus, there is no stifling two-year contract, where you end up signing away many of your rights.

The economy is going to get worse before it gets better, meaning many people will be faced with the difficult task of choosing among necessary services. Services like the aforementioned Hotspot @Home and prepaid wireless can make this easier. For instance, Cricket prepaid offers unlimited calling for a flat monthly rate. While the major carriers -- AT&T, Verizon, T-Mobile, Sprint, and Alltel -- offer unlimited service, theirs are far more expensive than Cricket's plans. Even further, you don't need to pass a credit check to qualify for Cricket's service. With the big companies, if you don't pass a credit check you have to put a hefty deposit down -- one many people cannot afford.

The only problem here is that many people are still affixed to their landline for one reason or another. They can't just cut that out and go with an unlimited cellular plan. For these people, a switch from postpaid cellular to pay-as-you-go cellular can help cut costs. Going with a service like Net10, which charges 10 cents a minute for all calls, can help keep cell phone bills in check. Because it is a prepaid service, you can more easily budget yourself, allowing you to keep the landline at home and keep your cellular costs under control.

Just because cellular phones have become an essential part of our lives doesn't mean that the current way we use cell phones is the only way. As more and more American families tighten their budgets, prepaid presents an option that will allow them to continue using this vital service, while at the same time saving money every month.

Joe Pawlikowski is the senior editor of Prepaid Reviews.