No-contract plans often bring to mind images of prepaid, grocery store cell phones and old-fashioned candy bar phones for people who rarely field calls. But this stereotype is as old as those phones. The new generations of smartphones come with modern no-contract options that can help you save money. So find a plan that works for you and dodge two-year commitments to a single Mobile Phone provider.
It may sound too good to be true, but companies are learning that some customers will only buy phone plans if they can avoid a long-term contract. Market demand, plus new government regulation, is pushing the idea of contractless service forward. As a result, major cell phone providers are entering a no-contract competition zone where the benefits are growing increasingly obvious.
One and Done
Traditional smartphone and mobile phone plans call for a two-year contract, essentially binding you to one provider and one type of service plan. Switching your plan costs money, and moving to an entirely different provider creates an even steeper fee. To win you over to the two-year contract, companies offer discounts on expensive phones or similar rebates.
Prepaid and no-contract plans work the opposite way. No discounts are applied, but you are not locked into a contract. You pay for your phone, and then you renew your service month by month for a basic fee.
The simplicity of the no-contract approach is clear — Pay for what you want. Each month is its own little contract. This works especially well for frequent travelers, seasonal workers who move between different parts of the world, or 20-somethings who bounce from city to city.
Outright Cost Savings
In addition to the control and clarity no-contract plans provide, they also save money directly. Monthly payments are lower without a contract, sometimes far lower. A two-year iPhone contract with AT&T usually costs around $90 per month for a hefty data plan, while a no-contract version from Sprint, with unlimited data, costs only around $30 per month. Others float between $40 to $60, old-phone prices for smartphone data and voice plans.
Some phone service providers offer several tiers of no-contract plans that increase the amount of data or voice minutes you can get with each successive tier, adding tethering abilities or higher data speeds for the highest levels. Even at the top tiers, you tend to save a significant amount of money each month.
The Provider List Grows Longer
More and more phone providers are jumping on board and offering some version of the no-contract plan. Cricket and RadioShack both have their versions of the no-contract plan, offering a variety of Huawei phones as possibilities.
AT&T, one of the last providers to follow the trend, has also released a smartphone and no-contract bundle for the GoPhone label. AT&T’s version includes unlimited talk and texting, but puts a 1 GB limit on monthly data, which may be too low for many consumers.
Fortunately, other options abound, from Verizon plans to a multitude of smaller providers with their unique phone options, like Boost Mobile or Tracfone. As the number of prepaid plans rises, so do the number of available phones, with brands ranging from Apple and Samsung, to LG and HTC.
The influx of prepaid plans is the result of higher demand among customers like you. The mobile phone industry is heavily saturated, with nearly all available customers already on phone plans. To help customers switch, providers are growing more daring in the types of plans they offer, which means more no-contract experimentation. After all, a guaranteed method of drawing in new customers is saving them money. Providers also have an eye on customers who have credit issues and cannot qualify for traditional plans.
Where is Your No-Contract Plan?
If you are wondering why you still have a contract plan, so are many industry analysts. Only around 20 percent of phone plans in the United States are prepaid. The typical consumer is not aware of the benefits of a no-contract plan, while many customers prove too stubborn or lazy to make the change. However, with the variety of options available today, no one needs to worry about missing out on their favorite new phone or skipping features that they need for the social scene or their job.
More practical reasons also keep people from making the no-contract leap. Customers face a high starting cost for starting prepaid plans. When you sign up for a two-year contract, you receive a smartphone for only a fraction of its real retail price, usually no more than $200 for the latest models. But when you switch to a contractless plan, you have to purchase the phone at full cost, upfront (this helps the provider count on at least a break-even profit).
For the latest phones, this means shelling out $400-$600 before your plan even begins, a price tag that may be out of your wallet range. However, if you can afford it, a month-by-month plan can save you money in the long-term and often make up the difference within a year.