It was only a few short years ago that having a cell phone without a contract was almost impossible. Sure there were some no-contract options available but, if you wanted to get the latest phones or the best data plans, it usually meant signing a two-year contract at least.
Since March of this year however no contract plans have become more easily available. That was when T-Mobile got rid of their annual service contract, and today there are plenty of options that you can take advantage of once your current phone contract has expired. The two big questions of course are these;
- Can you actually save money with a no contract cell phone?
- Will you receive the same level of service?
The answer to both of these questions, depending on your situation, should be yes. We’ve put together this blog today to take a look at the options that you have and give you the information and advice that you need to make a smart choice. Enjoy.
The Subsidizing Question. Most phone service carriers use something they call “subsidizing” to lower the price of any new phone that you get when you sign their 2 year contract. They do this because they actually will earn more profit from your contract, and the text and data that you send, then the phone itself. That’s why, for example, they can offer a $600 iPhone for $200. They also can recoup some of that money even if you decide to cancel early by charging you plenty of early termination fees.
With no contract you will typically pay the full retail price for your new cell phone in full upfront but the monthly bill will usually be significantly less. In this case it pays to purchase a phone that has a proven record of quality because you’ll want to keep it as long as you can. If you do hold onto the same phone for two years the savings with no contract phone can be significantly more but of course the upfront costs to purchase the phone and fall are significantly more as well.
What about the Service Plans? With the advent of no contract phones the plans that go with them have advanced as well and today you can get options very similar to their contracted counterparts. Unlimited talk and text is definitely available although some providers still offer plans that are “pay-as-you-go” so you’ll need to make a purchase every time you are credit runs out.
The key to getting excellent service with no contract phone is to do your research on the various important services that you need, including the network coverage area, customer service reliability, data speeds and so forth. The fact is, with many no contract plans a smaller coverage area is the norm. Make sure you also purchase a phone that has compatibility with several networks. For example, a device from AT&T will generally work with T-Mobile but not with Sprint or Verizon.
A Price Comparison. For the sake of example let’s take a look at a T-Mobile plan with a new iPhone 5C and compare it to AT&T.
T-Mobile offers the 16 gig iPhone 5C for $22 a month with no down payment, which equals $528 over two years. AT&T offers the same exact phone with a two-year contract for $100.
With T-Mobile you can get a plan with unlimited talk, text and 500 MG of high-speed data for $50 a month. With AT&T will get the same unlimited talk and text but only 300 MG of data at a cost of $70 a month. At the end of two years you will have spent $428 more for the iPhone but saved $480 on the plan, a net savings of $52. At this point however your iPhone will be completely paid off and you can start to pocket savings to the tune of $42 a month.
As you can see from this example, the best way to really save money with no contract phone in this case would be to make sure that you keep the phone longer than two years.
Avoiding a two-year contract with a phone carrier is something that many people are keen on doing and today it’s easier than ever to get a no contract phone and do just that. If you hold onto the phone long enough you will definitely save a good bit of money but, even if you don’t, the freedom to be able to change phones whenever you like is something that appeals to a lot of people.
As with any situation that involves recurring services, always make sure you read the fine print on any contract that you sign, even if it’s not a long-term contract. Then enjoy talking on your phone knowing that if you want to make changes to your plan, your carrier or your phone you can do it whenever you like.