Earlier today I was over on another site where a friend and fellow Minnesotan blogger, Travis, was talking about the cost of cell phone plans.
He looked at why we all need to be wary of the hidden costs involved in cell phone plans, both traditional contract plans, as well as with pre-paid no contract plans.
His post, “No Contract Cell Phone Plans Exposed! Are They Really Better?” discussed how the cost of the cell phone you purchase is either baked into your plan (with contract plans), or paid up front (no-contract). In many instances if you’re looking to have newer phones every couple of years there won’t be much cost difference between the two types of plans.
He summarizes:
No contract mobile phone plans are a lot of smoke and mirrors, and aren’t as different from the traditional two year contract as the carriers would like us to believe. But they do put control of the price and frequency of phone upgrades squarely under the control of the consumer, right where it should be.
The sentence in bold is key to me. The cost and frequency of phone upgrades will be one of the key determining factors in just how costly – or affordable – a cell phone plan can be.
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Keeping Cell Phone Plan Costs Minimal
I’ve written several articles on this site about how I’ve been able to keep my cell phone costs low. Let’s take a look at how we were able to save.
According to J.D. Power the average monthly cell phone bill as of 2013 is $79 per month, while the average family plan is about $149.
Switching To A No Frills No-Contract Plan
Initially my main cost savings on our cell phone bill came because we switched from a regular carrier contract plan where we were paying about $40/month per phone (I know that doesn’t sound like much these days, but this was about 10 years ago!), to a plan with Virgin Mobile where we were paying no more than $20 every three months – so just under $7/month. A savings of about $33/month – even more today!
Right off the bat we were saving quite a bit on our cell phone’s monthly service cost, and we only bought cheap cell phones with the new provider, less than a hundred dollars. I had my initial pre-paid phone for around 7 years, never upgrading – because it just worked. It made phone calls and did text messages, and that’s all I needed it for. When that phone died after being dunked in the wash, I bought a replacement phone, again, for less than $100. Phone costs were paid back in a couple of months through savings alone.
My wife has had a similar experience. We switched her to a pre-paid cell phone plan with Virgin Mobile years ago where she used the same phone for many years without upgrading. She recently wanted to have a nicer smartphone that had GPS, a keyboard for typing texts and other features – so we upgraded her to a pre-paid smartphone plan. Her new phone cost about $150 at the time. Even with that up front cost, which was still minimal, her plan was about $35/month for 300 minutes of calling, and unlimited texts and data. Similar plans elsewhere with contract plans went for $50-100/month or more.
Looking for what the best option for you is? Check out a site like MyRatePlan.com where you can compare plans (Just be aware that they don’t include all options).
Saving By Not Needing Constant Upgrades
In talking with friends and family, I am constantly amazed at how often some of them upgrade their technology. It seems that some of them are getting a new phone every year or two. When they upgrade their phones, they’re either getting them via an expensive contract cell phone plan (where the cost of the phone is built into the plan and they think they’re getting it free or at reduced cost), or they’re paying $500-600 up front one of the pre-paid plans.
To me that’s just crazy. My first phone I had for 7 years or more, and then when I had to upgrade it was only because that phone had died. Even the smartphone I own now was a couple years old and less than $100 when I bought it!
Saving By Moving To A Low-Cost Cell Phone Provider
We’ve been on the pre-paid cell phone plan bandwagon for many years now, essentially all of that with Virgin Mobile. It has been cheap and the service works well in our area (it piggybacks off of another network).
I recently heard about a way to get even cheaper cell phone service via a commenter on one of my posts. Basically you buy an unactivated Android smartphone, sign up for Google Voice and download an app called “GrooveIP” and you can make free VOIP phone calls when you have an available Wi-Fi connection. That option was cut off by Google this month, however, when they shut down external access to the API and basically killed the app. So late last year I started looking at other low-cost options – and found a low-cost cell phone provider called Tello.
Tello is a low-cost cell phone service provider (again piggybacking on the T-Mobile network) where you can get an Android smartphone with300 voice minutes, unlimited texts and 2GB of 5G data for only $8/month. All you have to do is buy the phone – which at the time was $99.
I signed up for a plan with Tello and bought a used Samsung Galaxy S20 phone which I’ve now been using for several months. The service, while cheap, doesn’t work any worse than one of the plans from a big provider. In fact they’re using the same mobile network, and I’ve never had problems with connectivity.
Pre-Paid Cell Provider Options Abound
If you’re looking to switch from a contract plan to a pre-paid plan to save money, there are plenty of available options. Here are a bunch of them, including the top 2 being my current favorites since I use them personally:
- Tello
- Republic Wireless
- Gen Mobile
- Ting
- Google FI
- Twigby
- Mint Mobile
- Boost Mobile
- TracFone
- Family Mobile
- Straight Talk
- Total Wireless
- Cricket Wireless
- Net10
- MetroPCS
- TracFone
As you can see, there is no shortage of options when it comes to no-contract cell phone plans – there are others I haven’t listed here as well. Some of them are pre-paid, some have no contract monthly plans and some have “pay what you use” billing.
Your best bet is to search around, compare the benefits of each plan (and phones available), and see which one best fits your needs.
Possible Negatives Of No Contract Phone Plans. Watch Out!
If you do decide to buy a pre-paid or no-contract phone plan, there are a few cons you should be aware of.
- Phones often cost more: The newer and better phones often cost a LOT more when the cost of the phone isn’t subsidized by a 2-year contract. Do your best to buy an older, cheaper model if you want to save.
- Newer phones are not always available: On many services the most recent models aren’t even available, only becoming an option after a year or two at the bigger companies.
- Purchased minutes sometimes expire: Depending on where you get your plan, pre-paid minutes sometimes expire and don’t roll over. Be sure what the terms of your plan are.
- Some features may cost extra – be sure to double check: Depending on the provider sometimes features like extra data, more texting, minute rollover, and more are extra costs that can add up quickly. Make sure you know what you’re getting for your money.
- Not all providers allow you to port your existing phone number: As a commenter noted below, not all no-contract providers will allow you to port your old existing number to their service. If that is a deal breaker for you, make sure you check before you switch.
Do Your Research And Find The Best Plan For You
When signing up for a plan make sure you know what kind of plan you’re getting.
Know if your plan is simply a no-contract plan where you pay a set monthly rate and get a set number of minutes, data and text, or whether you’re buying pre-paid packages of minutes/data/text that are good for a set period of time. There are also a few providers that have you only pay for what you use during the month, meaning a more variable bill every month. Depending on your usage, one of these types of plans may be a better deal than the other for you.
What kind of cell phone service are you currently using? How much are you paying every month? What tips can you give people to save on their wireless bill?
Moble Virtual Network Operator (MVNO) | Mobile Network | Minimum Plan Price | Free Tethering | Review |
---|---|---|---|---|
Gen Mobile | T-Mobile | $5 (Unlimited Text – No Talk, No Data) $10 (300 Min Talk & Unlimited Text – 1GB Data) Discounts if prepaid for 3 months. | Yes | Review |
Tello | T-Mobile | $5 (100 Min Talk & Unlimited Text – No Data) | Yes | Review |
Twigby | Verizon Wireless | $15 (Unlimited Talk, Text, 2GB high-speed data) | Yes | Review |
Ting | T-Mobile, Verizon Wireless | $9 (100 Min Talk & No Text – No Data) | Yes | Review |
Red Pocket Mobile | Verizon Wireless, AT&T, T-Mobile US | $10 (500 Min Talk & 500 Text – 500 MB Data) | Yes | |
Republic Wireless | T-Mobile | $15 (Unlimited Talk & Text – No Data) | Yes | Review |
Mint Mobile | T-Mobile | $15 (Unlimited Talk & Text – 3GB Data) If prepaid for 1 year. Prepay in 3,6, 12 month increments. Buy 3 Months, Get 3 Free) | Yes | Review |
Unreal Mobile | AT&T | $15 (Unlimited Talk & Text – 3GB Data). Prepay in 3,6, 12 month increments. | Yes | Review |
TracFone | Verizon Wireless, AT&T, T-Mobile US | $15 (200 Min Talk & 500 Text – 500 MB Data) If put on auto-renew save 5%. | No | |
Google FI | T-Mobile | $20 (Unlimited Talk & Text – No Data) | Yes | |
Total by Verizon | Verizon Wireless | $23.70 (Unlimited Talk & Text – No Data) $25 without auto-pay. | Yes | |
Cricket Wireless | AT&T | $25 (Unlimited Talk & Text – No Data) | No | |
Boost | T-Mobile | $35 (Unlimited Talk & Text – 3GB Data) | No | |
Straight Talk Wireless | Verizon Wireless, AT&T, T-Mobile US | $35 (Unlimited Talk & Text – 2GB Data) | No | |
Visible | Verizon | $40 (Unlimited Talk & Text – Unlimited Data) | Yes | Review |
John @ Sprout Wealth says
We’re currently with Verizon and I am so ready to move on from them. It’s just not worth the cost, in my opinion, and can use that money on much better things. We had no contract plans in the past, but the options today are much better. I just need to be able to convince my wife she can live without an iPhone and find a plan that isn’t restrictive on the minutes as we would likely go over each month with our business.
Peter Anderson says
A lot of the no contract providers do have the iPhone these days I believe, so if that is a must it might still be an option. Only problem is you’ll probably be paying more for the phone than other makes/models.
Mario Adventuresinfrugal says
Totally goes against the intuition, but yes they are. You’d think that providers would cut me a deal knowing that I’m locked in for a good two years, but such was not the case with Verizon. That’s why I’m with T-mobile :)
Leonard @ The Wallet Doctor says
This is really interesting. The contract-less plans always appear to be so attractive in terms of costs. I am always suspicious of things which appear to be too good to be true. You’ve given some great insight here. Thanks for the post!
Brian @ Luke1428 says
We are using AT&T for cell service, having recently moved on from Sprint when I upgraded to an iPhone. Their plan was cheaper but not as little as you are describing here. The biggest phone savings we’ve done in the past two years was to cut off our land line at home. That’s almost a given now if you live anywhere near civilization as cell coverage has greatly improved.
Gordon Johnson says
One thing we learned while using the AT&T GoPhone plan is that the phone number cannot be ported over to another carrier. So, choose your carrier wisely or be prepared to start all over with a new phone number and the hassle of letting others know.
Peter Anderson says
That’s a good reminder – I didn’t even think about porting a number. We were able to port our numbers to Virgin Mobile when we switched there, definitely something to check if you want to keep your number!
Travis @debtchronicles says
It just floors me to watch people stand in line overnight to get first crack at the new version of a phone, costing $600 or more, while holding the unbelievably obsolete previous generation (sarcastic) phone in their hand that they purchased less than a year earlier.
I think people have just lost perspective on what these devices are…..and the importance they really have in day to day life. I always tell my wife, my favorite app is the one where I can press numbers and talk to people. :)
Thanks for the mention, Peter!!!
Peter Anderson says
That’s my favorite app too! The one with numbers that talks to people. :)
Grayson @ Debt Roundup says
I always focus on bring your own phone programs. I have had straight talk and now have family mobile. No issues and I get good phones from eBay.
Peter Anderson says
I don’t think most people even realize that you can buy a used phone and bring it to the service for many providers. Definitely more affordable option for many people.
Jessica Prah says
T-Mobile USA’s success in the past year has been partly attributed to its switch to no-contract plans. Also on the T-Mobile Network, GIV Mobile provides philanthropy and no-contract wireless by donating 8% of customer’s monthly bill to up to three charities of his or her choice. GIV Mobile provides the same fast, reliable service while giving back to the community. There is a large variety of charities such as The Conservation Fund, American Red Cross and Doctors Without Borders.
HeidiE says
I’ve been with Verizon for years. In 2012, they offered a ‘free’ iPhone-4 with contract. I like free… But I had to invest in the data plan (a $49/mo increase). I’m struggling to afford my phone! (~$79/mo)
Liliya says
Hi Peter,
a very nice-written and informative article.
You might be interested to know, we at our Keepgo company have a great option for anyone who is frustrated with paying hundreds-dollars cell bills. Our data plan GoFi USA&Europe gives you 1GB/month for $8. Inviting you to check it out!