The Basics of Cutting Cost with Cell Phone Contracts

by Guest Contributor · 5 comments

Cell phones have become as ubiquitous as oversized jeans and MP3 players, but these devices usually require a long term contract. ,meaning big bucks if you don’t shop carefully. Before you sign on the dotted line, you should consider some things so you can pick the plan that meets your needs.

How Do You Use Your Phone?

Do you use your phone only in emergencies? Then paying for a monthly contract is foolish. This sounds idiotic, but many people actually never considered a pay as you go plan instead. Do you use your phone as your business line, and need to be constantly available? Then you need a plan with a lot of minutes and the freedom to use it anywhere at any time. Is the phone for a teen? Then get unlimited texting but generally, not a lot of minutes.

Figuring Out the Features You Need

Before you even look at available plans, take some time to assess how the phone will be used. If you are considering a plan for several users, than make sure you can vary the features by line. For example, I rarely text, but my teenager texts about 10,000 messages a month. I use the internet on my phone constantly, but he doesn’t use it at all. In our case, my phone has a data plan and his unlimited texting, so find a carrier that will let you fine grain the services on each line.

Data, texting and minutes are all available in specific increments. Assess your normal use and add 25% to ensure that you don’t exceed your limits. If you have ever received a bill after using too many minutes or texts you know how expensive over usage charges are. If you can find a plan that allows you to roll over unused texts or minutes (read: AT&T), then it could mean saving big bucks every few months to justify even a higher per month charge.

Price Things Out

Every company wants your money, and many of the large carriers will try to lock you in for two years in exchange for providing you with a cheap or free phone. Run the numbers. Saving $200 on a phone sounds great until you realize you are paying $20 more a month for the same plan you could have gotten elsewhere. To avoid overlap and competition, many large carriers stock different phones intentionally. If you want a particular phone, like an iPhone though, you may have to do business with a specific company.

Look at monthly fees, taxes and the price of the phone. Consider overage charges, phone replacement fees and roaming expenses.

Is Pay as You Go an Option?

For kids with their first phone or people who just don’t use the phone often, pay as you go is a great option. You get the security of a cell phone, but you only pay for what you use. Frequently usage is a bit more than if you purchased a complete cell phone plan, but you gain the convenience of staying within a budge and the freedom of not being locked into a contract. The phones are relatively inexpensive and do just fine as basic cellular telephones.

In the end, remember that they want your business so salespeople will always try to get you to commit. Take your time, and find the plan that best suits your needs. Sometimes, even paying for part of the phone to shorten the contractual length by a year makes sense.

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{ 5 comments… read them below or add one }

Alcoholic Millionaire February 14, 2010 at 8:50 pm

I’ve found that the T-Mobile prepaid phone plan is excellent. I recently was able to purchase a brand new phone with no contract for only 19.99 and it came with a $25.00 sim card. When I need to refill my minutes I hit up ebay and find a 1000 minute card for only $88. The minutes last for an entire year. A text message only costs 1/2 a minute. Last week a bit the bullet and purchased a magic-jack. Now i’m able to use that when I’m a home, and the prepaid card when out and about. I estimate that I use maybe 100 minutes a month on the road, and the rest is unlimited on the magic-jack at home. With this plan I’m spending $10.50 a month for all of my phone needs, with no contract.

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Mom February 15, 2010 at 7:33 am

I got my kids the Straight Talk $45.00pm prepaid unlimited calling, texting and data connection and they love it. The airtime is linked to doing chores, keeping up grades etc.

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CD Phi February 15, 2010 at 9:01 am

I also use T-mobile prepaid phone plan and it is definitely more affordable than most carriers, probably aside from pay as you go phones. @ Alcoholic Millionaire-Wow. That sounds like a great plan….Never really thought of that or even known that T-mobile offers that. Sounds like it’d be a great phone for a person who only uses a phone during emergencies.

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loaferman March 1, 2010 at 2:48 am

I recently switched to Straight Talk, which is prepaid. I figured, why get tied down in a contract that has you paying out your nose every month when you can pay by the month and save hundreds. The funny thing is that I’m getting this great deal and still getting to use the Verizon towers with my service. You won’t be able to find a better deal and a better service out there.

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John Tyler January 29, 2011 at 6:58 pm

It’s unbelievable how much you can save from looking hard into your cell phone bill. It’s almost a given these days that you have a cell phone bill. As my contract expired with AT&T, I looked towards some other plans. One thing I never considered was pre-paid. When I found out that Net10 used the Verizon/At&T network to service their customers and saw their prices, I took the leap. It actually ended up being a great change. There was no risk at all since there were no contracts. I’m very pleased with my service now, and it’s def a way to save some dough every month.

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