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No Contract Cell Phone Plans

One of the main recurring expenses faced by modern families is the cell phone plan. By the time you pay for talk, text, and data, you could easily end up paying $100 a month or more for your cell phone plan — and with a contract you are locked into that price for two years.

Over time, that starts to add up. The good news is that many companies are now offering cell phone plans that don’t require you to sign a contract. You can get a plan for as little as $10 to $30 a month, and an unlimited talk, text, and data plan for as little as $50 or $60 a month. This is different from a prepaid cell phone [3]. With the prepaid phone, you purchase a set number of minutes ahead of time. When you run out of minutes, you buy more. A no contract cell phone plan charges you a monthly fee for a certain number of minutes, or for unlimited minutes (and text and data, if you choose). However, you don’t have to keep renewing your monthly service if you don’t want to, and you don’t have to worry about fees for terminating your contract.

A no contract cell phone plan can be a good way to get the cell phone service you want, but at half the price. However, as with all financial decisions, your lower monthly payment comes with a trade-off.

You’ll Have to Buy the Phone

One of the reasons that so many people are willing to lock in a contract is that the phone often comes free, or at a much lower price. This is especially true of smart phones. When you are paying for a non-smart phone, at $30 to $80, it doesn’t seem like such a huge expense. You buy the phone up front, sign up for a no contract monthly plan that’s fairly inexpensive, and reap the savings.

Things start to get dicey with a smart phone [4], though. Smart phones can cost as little as $80 or $100, or cost as much as $500 or more, depending on the brand and model you choose. The iPhone is available now without contract, but it could mean paying more than $600 up front if you aren’t willing to commit to a two-year contract. That upfront price tag can be a little daunting for many people.

Consider what kind of phone you want to have before making the decision, and realize that you might need to come up with much more up front if you don’t decide to go with a cheaper phone.

You Can Still Save Money Over Time

Even with the higher up front cost of a smart phone, you might still save money in the long run if you go contractless. According to an article from CBS News [5], getting a base model iPhone with a no contract plan from Virgin Mobile costs $800 less in service and for the phone over two years than getting the same phone with a two-year contract from Sprint. That’s something to think about.

Before you make your decision, run the numbers. Get the details of what you will pay each month and multiply that by 24 (to reflect two years of service), and add it to the up front cost of the cell phone on each plan. You might be surprised to find that you are still better off with the no contract plan. Plus, you won’t have to worry about getting locked in for another two years, or paying fees, when you decide to upgrade your phone.

(Photo: Dru Bloomfield [6])