Why a 2-Year Contract Costs You More for a Cell-Phone

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Why a 2-year contract costs you more for a cell-phone

One thing I hear on an almost weekly basis is, “I can’t believe my cellphone bill was x amount of dollars this month!”. Yes, the big name carriers (Verizon, AT&T, Sprint, and T-Mobile) are what most people know of, but there are many more options in terms of price, coverage, plans, and more. And I will say this right off the bat; buying a $600 phone and joining a prepaid carrier, even the ones you see prepaid cards at the gas station, will save you more money in 2 years than getting that same phone for $100 with a 2 year contract on a major network. I want to preface this by saying that this is merely my opinion and as a consumer YOU have the final say in your decision making. This is merely informational and hopefully educational to anyone who isn't familiar with the cell phone industry. I have been head-on with it for the entire 6 months I've been up in Duluth now. Hopefully this is a good resource for you when contemplating your next wireless decision! For the sake of this write up, I'm going to do a lot of assuming that you have a smartphone (it's 2013 after all, hop on the bandwagon already!).

Carriers
They're going to be the companies that provide you service. There are many to choose from, hundreds in fact and they all offer their own special rates/plans/features that separate them from the next. Chances are you're already with a provider receiving service, I actually don't know anyone under the age of 40 that doesn't have cell phone service.

How do you choose what's best for you? Easy question to start to answer, but to find the one that best suits you depends on your needs. Each carrier provides their services in a usually nice and easy to read table based on minutes and messaging. Most now provide unlimited minute and messaging plans but if you're someone who is a bit more anti-social and frugal there are other options available for smaller allotments.

MAKE SURE YOUR CARRIER HAS COVERAGE IN THE AREA YOU FREQUENT MOST. This cannot be stressed enough, you may find a provider has some excellent prices and features that you didn't find elsewhere, but it's not going to do you any good if you don't have coverage. As far as Minnesota goes most carriers cover it pretty well and just about all the carriers cover the greater Twin Cities and Duluth well, but check their coverage maps which can be found on the carrier's website.

Carriers also provide phones at what's called "subsidized" prices, meaning because you're signing a 2 year contract and thus guaranteeing them to be paying a monthly bill for 24 months, they can provide cheaper prices for phones rather than having to pay full retail price. On top of this, every major carrier has some sort of fee attached to it usually referred to as a activation or upgrade fee, claiming they help keep subsidized prices down and expand network coverage, often in the range of $30-$40 per phone activated or upgraded.

Contract plan details
Why should I even care about this, (INSERT CARRIER HERE) has served me well with the 2 year contracts! Well that's great and all, but chances are you're overpaying in some area, especially if you have a smartphone plan. AT&T and Verizon both introduced last year mobile data share plans, which gave subscribers unlimited minutes and messaging, and data was to be split up among the entire account, rather than each person individually like it was previously. Depending on what plan you currently have this may be a good option to adopt if you've got a few smart phones on the account.

I'm going to give you the example of my current plan: Between my mother, my sister, and myself we split 1400 minutes, unlimited messages, and my line has 2gb of data. Together this adds up to roughly $140/month (including her 22% discount). Against Verizon's new Family Share plan which the only difference would be unlimited minutes vs the 1200 split, it's $160 month and with that discount it'd be...
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