Last year at Living on the Cheap, we covered a wide range of prepaid cellphone options if you were looking to save money on your cellphone bill. Prepaid plans are an alternative to the contract-based plans that the big cellphone companies are offering and they can save you some real money over those recurring monthly charges. Making a two-year commitment to one of the big companies can also be more than a little stifling.
Now there are a couple of in-between options: Both T-Mobile and AT&T are offering no-contract plans for your cellular pleasure.
Prepaid vs. no contract?
So what’s the difference? Really, it comes down to when the bill is due. On prepay, you pay the cell company up front. No credit check, no hassles.
A no-contract plan is paid at the end of the month. Not a big difference — except the company does take the opportunity to add taxes and fees onto your bill. (You’re still paying those taxes with prepaid plans — they’re just rolled into the flat fees.) This will typically add another $8 to $12 to your monthly bill.
So how do the specific charges break down? Let’s take a look.
AT&T is one of the two biggies in the cell business. Frankly, I was surprised to see it go the no-contract route. The company is advertising its Mobile Share plan with a huge media blitz.
$45 a month is the pitch. But what do you get for that?
Unlimited talk time and texting are included. So far, so good. The base line data that is included with this plan is 300 MB. That is just enough data to get you hooked and deeply in trouble — about 50 song downloads or as few as two YouTube videos. Don’t even think about Netflix unless you are on WiFi. Additional data will be billed at $10 per gigabyte.
It is easy to picture your nice $45 plan coming in at $100 if you are not careful.
Taking the the Mobile Share data up to a little more reasonable 2 gig a month bumps your plan to $80 a month. AT&T will still bill you for every bit of data over that amount.
What about a smart phone to add to that plan? AT&T will let you finance a phone and pay for it monthly, but you are not going to get the contract discount for that phone. A brand new iPhone 5S would run you $650. Ouch. Spreading that out over 20 payments adds $32.50 a month to your bill.
Be prepared: If you buy a phone, the entire sales tax will be due at purchase. That will addanother $30 to $50, depending on your state’s taxes.
While you could get that same iPhone for $199 with a two-year contract, you are paying an extra $15 a month for that discount. That is $360 over the life of the contract for that $450 discount. You actually get a slightly better deal on AT&T to have a contract if you choose to upgrade your phone every other year.
If you walk away on your no-contract deal, the entire amount you owe on your phone is due immediately. If you stick with AT&T, the company will let you trade that phone in for a new one every 12 or 18 months, depending on how long you have financed it over.
The Pink Network
T-Mobile’s no-contract plan is set up a bit differently. Their base plan is $50 a month (again, plus $10 or so in taxes) for 500 MB a month of data and unlimited talk and text. There is also a one-time $10 fee for a SIM card that goes in your phone.
The real benefit with T-Mobile: If you go over your 500 MB limit, the company doesn’t charge you extra fees. It just slows your Internet speed down. This is a big deal because you won’t get any surprises in your bill from T-Mobile at the end of the month. If you want unlimited high speed, you can jump to its $70 a month plan
T-Mobile will also finance your fancy new phone. The company will give you a small discount on an iPhone5S and sell it to you for $600 on 24 payments of $25. Again, if you walk away from T-Mobile, the balance on your phone is due immediately. T-Mobile does have a plan called JUMP that allows you to trade in your phone every six months, but it adds $10 a month to your bill. A bonus: JUMP also functions as an insurance plan for damage or loss on that phone.
T-Mobile has an additional benefit if you are planning on some international travel. It has free text and data roaming in more than 100 countries at no additional charge. This means your U.S. phone number is still your number while you travel abroad. You will be limited to the slower 3G Web speeds while you are there unless you pay extra.
Phone calls are charged at 20 cents a minute, but a little bit of creativity with Skype will get you around that since the data is free.
Here’s the deal: T-Mobile is a far better deal on the no-contract end of things than AT&T. Both plans are basically the same price and taxes and fees will add another $10 a month so they are really in the $55 to $60 range each month. However, one undisciplined data month with AT&T and you could be looking at a bill twice that.
I actually took the plunge myself and went with T-Mobile. I opted not to go the financing route but bought an unlocked Google Nexus 5 at $349 to pair with its service. Nearly any unlocked GSM phone that labels itself as “quad band” will work perfectly wherever you go.
T-Mobile also allows you to suspend your phone for up to three months if you want to shelve the phone between trips. This lowers your bill to $10 a month and allows you to keep the same phone number.
Are you looking for the best deal on a family plan? Check out our comparison of cell phone family plan deals. You can also check out Republic Wireless, which has plans starting at $5 a month.
Tom Meitner says
I’m a huge fan of Ting. My wife and I use Ting and we went from a Sprint contract at over $100/month to a no-contract plan – with excellent customer service! – at around $45/month for the both of us. I always recommend Ting whenever I can, because it’s a great company, great service, great coverage, and no contracts. Worth a look!
Shawn Rosvold says
The best phone deal, bar none, is Republic Wireless. My wife and I switched from spending nearly $200 a month on Verizon to spending $20 each per month for unlimited data, texts and long distance. There is no contract to sign. You seriously need to check this out.
Republic Wireless is insanely affordable with plans starting at $5 a month. http:/www.republicwireless.com
I’m glad you posted prepaid. I think many don’t realize their bargain compared to contract service… One that you may wished to add is Straight Talk. They use Verizon or AT&T towers depending on phone chosen and sometimes where you live. We’ve used them for years and we love the service. They have two main plans that fit most U.S. citizens talking/texting/net habits. One is $30/mo (1000 mins, 1000 texts, 30 MB) and they only charge sales tax, NO FEES– The other main plan is $45/Mo plus Sales tax and no fees (Unlimited Everything)
They have International plans too, as well as ways to pay for more months at once and that makes them cheaper/mo —
Online (versus Walmart stores) offers many new phone choices but we found getting a free/cheap refurbished phone was good for us. They are still guaranteed for a year. Often times the shipping is free for the phones during one of their regular promotions.
I’ve had great coverage as we travel too. Even in many less populated areas away from major interstates.
I have switched two of my phones from Verizon to Republic Wireless and have cut my monthly cost from over $150 to just $50. Republic makes you purchase the phone but have 4 different plans ranging from $5 to $40/month to fit anyone’s needs. Unlimited Talk, Text and Data and after paying for the phone still saving over $1,000 for the year. Take a look http://republicwireless.com
Ting is hands down the best service I’ve ever used. I tried Virgin and it was decent but my phone died within a year. Tried Republic Wireless and the sound quality and customer service was the worst. Switched over to Ting about 4 months ago and haven’t had a second thought about it yet. Service is awesome and my bill is less than $40 a month.
We tried Republic Wireless and…wowww, WHAT A DISASTER!!! They give NO CUSTOMER SERVICE! The only way you get customer service out of them is if you go to their forums or their facebook page and cause a scene. There are tons of people complaining on their forums about their horrible customer service. If you just go through the regular channels to reach tech support or customer support, they won’t get back to you for WEEKS. I saw this list of caveats that was posted over at CNET recently. I wish I had known about this list before our nightmare experience with this company. Please know that this company, Republic Wireless, is lacking in just about all the features that most cellphone users have come to expect as standard features. Here is that list:
-MMS is not supported (they say it is but users complain on their forums constantly that it doesn’t work) -Short codes are not supported -No text to email gateway -No account suspension -Your number cannot be changed -No tethering -If you “root” your phone, they will void your warranty and no longer offer you support -Dialer cannot be programmed to accept a ‘pause’ -Cannot change amount of ringtime before going to voicemail -No international calling -No porting of Google Voice number -Republic is a VoIP provider, NOT cellular -No transferring of phone to new users or splitting/combining accounts -No BYOD -No services in Alaska, Hawaii, or NH -Voicemail has no envelope features -Voicemail notifications not delivered if you have no cellular coverage -911 caller ID will show your secret Sprint number unless you’re on wifi -No X11 numbers can be dialed, only 911 -No customer service other than crowd-sourced forums -Only ONE 4G smartphone is sold.
Marlena Magnes says
Also, I have Net10 I pay $50 a month and get unlimited everything. If I pay it online, all I pay is $3 service charge. This might be a great alternative for anyone who really uses a lot of data plan or text plan.
Jeff Mac says
I looked at Republic Wireless last year here:
Customer service was an issue but I think the limited phone selection was a bigger issue. Now that they have the Moto X as well the options are a bit better but that phone you purchase will not ever work on someone else’s network. They do have a 30 day money back option to try it but you are going to end up buying and keeping that phone if you go somewhere else.
Straight Talk was the co-winner on our run-through of family plan here:
It is a particularly good deal if you pay for service 90 days at a time.
I have not looked into Ting yet. Thanks for the tip on that!