I believe it was back in 1998, when I was 17, that I purchased a cell phone to replace my pager. I purchased a Qualcomm QCP-2700, a small brick of a phone. It didn’t matter that its shape made it awkward to talk on and it didn’t fit well in any pocket. I finally had my own phone. I paid for the full value of the phone, and then went to the carrier and added service to the phone -- because that’s what you did in the 90’s.
By the time I had grown weary of carrying around the Qualcomm, things in the cell phone market had changed. My next phone, a Nokia 5110, was THE phone to have. It was slim, you could change the faceplate every day of the week if you wanted, and it had a game called ‘Snake’, arguably the best game ever available on a mobile device. The difference was, now my phone was subsidized. I bought the phone at a fraction of its retail price, and all I had to do was sign a one-year contract.
Every phone I have purchased since that Nokia, and probably true for the majority of our readers as well, has been subsidized. What I failed to realize at the time is every time I bought a new phone at the discounted price by signing a contract, I was paying for the phone long after my carrier had made up the cost of selling it to me at the lower price. In other words, when a new carrier sold me a $300 phone for $50, they made back their $300 and then more over the course of my contract. After my contract ended, my bill was the same, so I was paying for a phone that was already paid for. Do you see the problem?
I have been in this pattern of signing a multi-year contract to buy a discounted phone for so many years, I was shocked to find things had changed again in the cell phone market. Today, it appears cell phone carriers are less geared toward getting you to sign a contract -- they just want your business. Carriers are now willing to offer you several options depending on your needs, something that hasn’t always been the case. You just need to know what to ask for.
My contract with my carrier expired this month, and I also became eligible for an upgrade last November. Armed with this new understanding, I called each of the Big Four carriers (Verizon, AT&T, T-Mobile and Sprint) and asked them about their plans specific to my situation: I have an iPhone 4S, and don’t have any reason to upgrade to a newer model -- it works well for me and it’s paid off. I would also like to be on a month-to-month contract.
These are the options I found that were available given my situation:
I’m okay with not having the latest model phone: Call your carrier and ask them if you have access to a less expensive plan. If they don’t offer you a decent alternative to your current plan, then you might want to shop around. The key is to tell the potential carrier that you want to bring over your current phone. That should give you access to less expensive plans that would not be available to you if you signed a two-year contract.
I want a new phone at a discounted price: You have an option that wasn’t there even two years ago. The trend now is to offer customers an installment plan to make paying for the retail price of the phone easier. So if you don’t want to pay $600 for a phone upfront, all four major carriers offer to split up the cost of the phone over a pre-determined amount of time, usually 24 months. Some require you to sign a contract, some don’t. Either way, you only pay for the cost of the phone, and then the bill decreases when it’s paid off. Some carriers still offer you the traditional discounted phone with a two-year contract, but you’ll pay more than the value of the phone over the long haul. If you can, sell your old phone to the carrier to be used as a credit toward the new phone.
I want to buy a phone at full price: If you’re willing to pay the retail price of a phone, the plans you’re offered should be lower, whether you stay with your current carrier or move to a different carrier. This is because you will be on a month-to-month contract, which also gives you the flexibility to leave the carrier anytime. Again, if you can, sell your old phone to the carrier to be used as a credit toward the new phone.
Another idea is to go prepaid. For those people who have been bitten by a higher bill by going over on data or minutes, or are on a strict cell phone budget, a prepaid plan should be a consideration. The carriers generally have you buy the phone at full price, and then pay for the service before you use the phone every month.
In order to find the best deal for your usage, you need to know what your current usage for data, minutes and texts is. For example, I have unlimited data with my current plan, so I never worried about data. However, probably like most people, I overestimated how much data I was using. I thought I was using a crazy amount, but when I called the carrier, they informed me I was using between 2 and 2.5 gigabytes per month. Now, I can shop for data plans that fit my lifestyle and avoid paying for more than I need.
Sometimes it’s difficult to leave a company you’ve been with for years. You may feel a sense of dedication to them, or you were ‘grandfathered’ into your current plan and you believe it’s not possible for you to find a better deal. Either way, it does not hurt to shop around to find a plan that may fit your needs at a better price.