Cell phone contracts are bad. You get a seemingly cheap phone up front, but you more than pay for the cost of the phone over two years. Prepaid phone plans are surging in North America for a reason.
Prepaid phone plans will be cheaper and more flexible than traditional contracts with big carriers for many people. However much you use your phone, there’s a good chance you can save money with a prepaid service.
No More Contracts
Here’s how cell phone service typically works in North America: You get a subsidized phone for “free”, $99, or $199. You sign up for a two-year contract and more than pay back the cost of that phone over the length of the contract. This is similar to leasing something or purchasing it on a credit card and paying it back over two years — you spend less up front, but you’re paying more in the long run.
But this isn’t the only option. You could opt for a cheaper prepaid service that doesn’t lock you into a contract. If you don’t use your phone much, you could just pay for what you use and avoid the hefty cell phone bills. If you use your phone a lot, you could get a cheaper plan, too.
Now, this certainly isn’t for everyone. If you want the latest iPhone or Galaxy smartphone every two years and require a 4G data connection, prepaid services may not be for you. On the other hand, if you don’t need the latest phone, you can save money here. You can also save a huge amount of money if you don’t use your phone much.
When you choose your prepaid or contract-free service, you’ll often be able to purchase a phone from them. You’ll generally be able to find dirt-cheap dumbphones and the cheapest, slowest Android phones for not very much money. If you are able to buy a top-of-the-line smartphone, you’ll have to pay the full, unsubsidized price. That’s $649 for either an iPhone 5S or Samsung Galaxy S4.
Whatever phones the service provider offers, you could always buy a phone elsewhere — for example, you could buy an unsubsidized iPhone direct from Apple and then take it to your cell phone service of choice. Most services will allow you to get a SIM card and pop it into your existing phone rather than purchasing a phone.
If you can get a hand-me-down smartphone, you can often save quite a bit of money. For example, you may have a family member upgrading from an iPhone 4S to an iPhone 5S. You could take their phone to a prepaid carrier and have a nicer phone on a cheap cell phone plan. If you brought an old smartphone to a big carrier like AT&T or Verizon, they wouldn’t give you a discount on your monthly plan. You’d have to pay the same amount of money every month as if you had gotten a subsidized phone.
Google’s Nexus phones are also great options for people looking to buy smartphones and pay up-front. Google’s Nexus 4 offered a modern, almost top-of-the-line Android smartphone experience at $299 or $349 when it came out last year. Google will soon be releasing the Nexus 5 and it’s expected to be priced at $349. That’s certainly a lot more than a cheap phone, but it’s a fairly high-end smartphone at almost half the price of an iPhone 5S or Galaxy S4. Nexus phones can be purchased online from Google’s Play Store.
When choosing a service, you need to consider what you actually use. If you’re someone who only uses your phone rarely, you can get plans that will allow you to pay as little as a few dollars per month. If you’re someone who’s usually in range of Wi-Fi, you may not need much data at all. If you want a plan with unlimited talk, texting, and data usage, you can get it for much cheaper than you’d pay on a major carrier like AT&T.
The options here range from pay-as-you-go plans, like the ones offered by T-Mobile, which allow you to put a certain amount of money in and only drain that balance when you actually use minutes, texts, or data. If you only make a few calls and send a few texts per month, you’d only pay a few bucks. On the other end, Walmart’s Straight Talk service is a popular option that offers unlimited talk, texting, and data at $45 per month.
Which service is right for you depends on a lot of things, including your usage and what each network’s coverage is like in your area. You’ll want to do some research of your own before choosing a service.
Prepaid services also offer you even more flexibility after you choose one. If you’re not happy or a better deal comes along, you can switch — you’re not locked into your service for two years and you won’t pay an early termination fee.