Photo Credit: Austin Krause
When you subscribe to a cellular service contract, you’ve probably paid to much. Granted upfront you might save a few bucks by getting a free phone however in the long-run –you won’t come out ahead.
At&t is the worst offender when it comes to overcharging on contract customers vs. prepaid plans. When comparing the two, did you know you’re paying about double? Most cases this represents about a two thousand dollars bogey.
 | Minimalist Plan (2 years req) | Prepaid Minimalist Plan | Unlimited Plan (2 years req) | Prepaid Unlimited Plan |
|---|---|---|---|---|
| Monthly Plan Price | $39.99 (Talk) $25.00 (Data) $0.20 (per SMS) | $0.10 per minute | $69.99 (Talk) $45.00 (Data)$20.00 (Text) | $50.00 |
| Talk Minutes | 450 | 450 | Unlimited | Unlimited |
| Requires Data? | Yes | No | Yes | No |
| Data Cap (Monthly) | 2GB | $0.01 per 5KB | 4GB | Unlimited (Fast until 5GB cap) |
| Monthly Cost (Before Fees & Taxes) | $64.99 + SMS fees | $50 | $134.99 | $70 |
| Total Cost | ~$75 | $50 | ~$145 | $70 |
| Cost Over 2 Years | $1,800 | $1,200 | $3,480 | $1,680 |
Not far behind At&t, Verizon holds onto its position as the most expensive wireless carrier in the United States. Although the prepaid plans are also expensive, you will still end up saving money on a prepaid plan vs. a contract.
 | Minimalist Plan (2 years req) | Prepaid Minimalist Plan | Unlimited Plan (2 years req) | Prepaid Unlimited Plan |
|---|---|---|---|---|
| Monthly Plan Price | $39.99 (Talk) $0.20 (per SMS) $30 (Data) | $44.99 (Talk) $0.20 (per SMS) $0.99 (Data / day) | $69.99 (Talk) $20 (Text) $30-80 (Data) | $64.99 (Talk + Text) $0.99 (Data/day) |
| Talk Minutes | 450 | 450 | Unlimited | Unlimited |
| Requires Data? | Yes | No | Yes | No |
| Data Cap (Monthly) | 2GB | Unlimited Per Day | 2GB, 5GB, or 10GB | Unlimited |
| Monthly Cost (Before Fees & Taxes) | $69.99 + SMS fees | ~$44.99 + $1 for each day of data use | ~$109 | ~$94.99 |
| Total Cost | ~$80 | ~44.99 + $1 per day of data use | ~$120 | ~94.99 |
| Cost Over 2 Years | $1,920 | $1,080 – $1,700 | $2,880 | $2,280, |
T-Mobile has always been considered the “budget” wireless company. Going prepaid can still save you a nice chunk of change over a two year contract.
 | Minimalist Plan (2 years req) | Prepaid Minimalist Plan | Unlimited Plan (2 years req) | Prepaid Unlimited Plan |
|---|---|---|---|---|
| Monthly Plan Price | $39.99 (Talk) $20.00 (Data) $0.20 (per SMS) | $50.00 100 MB Data cap | $59.99 (Talk + Unlimited Text) $30-60 (Data) | $70.00 |
| Talk Minutes | 500 | Unlimited | Unlimited | Unlimited |
| Requires Data? | Yes | No | Yes | No |
| Data Cap (Monthly) | 2GB | Unlimited (slow after 100 MB) | 5GB or 10GB | Unlimited (Fast until 5GB cap) |
| Monthly Cost (Before Fees & Taxes) | $59.99 + SMS fees | $50 | ~$90 | $70 |
| Total Cost | ~$70 | $50 | ~$100 | $70 |
| Cost Over 2 Years | $1,680 | $1,200 | $2,400 | $1,680 |
You might have noticed there isn’t a chart anywhere for Sprint. That’s because Sprint Nextel doesn’t offer a prepaid service. That said, Sprint acquired the prepaid carrier Virgin Mobile so technically you can get prepaid from them.
Here’s a cost comparison between the four big no contract wireless carriers in the U.S. Notice all four are inexpensive compared to AT&T, Verizon and TMobile. All offer unlimited data, text and talk.
| No-Contract Carriers: |
Virgin Mobile |  Cricket Wireless |  metroPCS |  Boost Mobile |
|---|---|---|---|---|
| Monthly Plan Price | $45 | $55 | $60 | $55.00 |
| Talk Minutes | 1200 | Unlimited | Unlimited | Unlimited |
| Data Cap (Monthly) | Unlimited | Unlimited | Unlimited | Unlimited (Fast until 5GB cap) |
| Monthly Cost (Before Fees & Taxes) | $45 | $55 | $60 | $55 |
| Total Cost | $45? | $55? | $50? | $55? |
| Cost Over 2 Years | $1,080 | $1,320 | $1,440 | $1,320 |
Other reasons you should avoid Wireless carriers and contracts
Should you always buy your phone outright? I think so. Here are three more reasons to completely avoid carriers, though not all of them are related.
Reason #1: Phone Prices & Activation Fees
Even when you think you’re getting a good deal on a phone, thanks to that two year contract you’re signing, buying directly from the carrier still results in being ripped off. Despite the fact you’re already paying more than you should on a monthly basis, the wireless company isn’t giving you the best deal on your phone.
If I can’t persuade you to purchase a phone outright and avoid the two year contract; at least visit Amazon.com, Wirefly or another online third party phone retailer. You’ll get the phone you want without paying a dime, and you’ll get the activation fee waived in most cases.
Reason #2: Terrible Customer Support
What kind of technical support do you get when you pay the full premium contract price every month? The kind that speaks incomprehensible English. The reps only understand how to verbalize words on their screen and operate on an extremely slow computer. When you’re on the two year contract, the wireless companies know you’re locked in. At this point customer service doesn’t matter. The wireless carrier is thrilled at the prospect of your phone not working. It means less people using its towers — without any loss of revenue. Yeah I know… I’m making some broad assumptions here but you tell me if I’m wrong.
Reason #3: Prepaid plans avoid all of the hassle
With a prepaid plan, you own your phone. You can cancel whenever you want without incurring an early termination fee (ETF) or a technology cancellation fee (incurred when an expensive phone is discounted for a contract). Customer support for prepaid plans is separate, and it’s safe to say the experience is vastly improved. At least in my experience.
With prepaid plans, the company knows it can lose you as a customer so it wants to keep you happy. Additionally, when you go prepaid, there’s no credit checks, no collections agencies hassling you for missed payments and unlimited data actually means unlimited.
I’ve been a happy consumer of monthly wireless service plans since my iPhone 3G 2 year contract ended with At&t and I haven’t looked back since. I’m very appreciative to the tip I received back then and I hope you enjoy this groovyTip as well!
5 Comments
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Jpop333
Wow the full price for At&t is more than double the prepaid price for unlimited plans. That is crazy!
Brian Burgess
I use prepaid myself. Virgin Mobile – runs on the Sprint network. They have actually started getting some decent Android phones and I only have to pay $35 every three months…depending on how much I use it – which isn’t often.
Plus I live in the sticks of MN. Sprint is the only decent coverage I can get out here.
For a lot of people – prepaid is the way to go. Especially if you don’t use your cell very much.
Adam
You should add the free or discounted phone into the formula to show the cost with a discounted iphone vs. paying full price for the iphone.
I think the monthly service will still bring you out ahead.
Austin Krause
It definitely does.
If you think about it, going monthly saves at least $500 in all cases. But if you want to go by averages, then the savings are more like $1000 for the average person.
Then consider the average smartphone today, whether it be an iPhone, Android, or Windows Phone, costs around $500.
No matter who you go with, no phone company will subsidize the full cost of the latest $500 smartphone. When I picked up the Samsung Galaxy from Sprint a year ago I still paid $200 for it despite getting a 2 year contract -and that was the best deal available at the time.
In my case, I might have saved $300 on the phone upfront. But in the long run the 2 year contract was going to cost me an extra $1,440 – so I still lost $1,140 by not going prepaid. That’s enough to buy 2 brand new smartphones!
Here’s the math listed out:
– Sprint cost over 2 years [$3,120]
– At&t prepaid over 2 years [$1,680]
– Total difference between plans [-$1,440]
– Amount of my phone Sprint/Amazon subsidized [$300]
– Total difference with phone subsidy accounted for [$1,140]
99% of the time there isn’t any exception to this. The only further advice I would lend is to wait to buy a phone when it first comes out. If you don’t mind being 6 months behind the latest and the greatest you can save another $200-300 by getting the phone on Ebay or discounted online vendors. Refurbs that include a warranty or have an added Squaretrade are just as good as brand new as well.
B Man
Living in the sticks of Wyoming, I guess I’d need to call each plan to see if any run on the only network worth much here – Verizon. Is there an easier way to see which plans might be available geographically?