The Pros and Cons of No-Contract Cell Phone Plans

English: New Mobile Cell Phone Technology

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I am now 2 months into my new cell phone plan with Virgin Mobile. There have been a few setbacks, but for the most part, I couldn’t be happier to have dropped AT&T in favor of a no-contract plan.

I wouldn’t be willing to claim that no-contract mobile phone plans are for everyone. There are some cons that may be considered deal breakers for some.

But if you can live with the negative features common to no-contract plans, then when your cell contract is up, it is probably time to ditch your current provider and go no-contract.

Pros of no-contract cell phone plans

No contract: This seems like it should go without saying, but I’ll say it anyway. Traditional cell phone providers lock you into an agreement of up to three years, although the standard length is two. The cost of breaking this agreement is up to $200.

The no-contract cell providers have none. Combined with number portability laws, the limiting factor I’d only how often you can afford a new phone.

Price: This was the real reason for my switch was price. When I had AT&T, I opted out of a data plan for my dumb-phone. To add unlimited data to their lowest voice plan and unlimited text, the plan would have cost $70 per month, plus taxes. When my wife switched to Virgin Mobile, she got the same number of minutes (300), plus unlimited text and data. Basically, the same plan as I would have gotten for $70 on AT&T. Her cost: $35. That’s right, for the same plan, she paid exactly half of what I would have.

Cons of no-contract cell phone plans

Limited Selection: Virgin Mobile offers 12 phones on their no-contract plans. AT&T has 50. No contract providers tend to get slightly older technology, also. Virgin Mobile has 2 4G phones available. Two out of twelve works out to almost 17%. AT&T has 38 4G phones; that is over 3/4ths!

Now that the iPhone is pretty much available on every carrier on the planet (or so it seems), Virgin offers two: the iPhone 4 and the 4S, both 3G. AT&T has the 4, the 4S (in 4G) and the 5.

How about the latest version of the Android operating system. Ice Cream Sandwich? Virgin Mobile has 4. Really they have three, because they have both the 3G and 4G version of the HTC One V. AT&T doesn’t give up that information easily, but a Best Buy circular from 3 months ago listed more ICS phones than that for AT&T.

2nd tier status on networks: No contract phone providers don’t actually have their own networks. In the US, only AT&T, Verizon, Sprint, and T-Mobile actually own cell infrastructure. No contract providers simply rent bandwidth off of other companies, usually Sprint. A lot of people don’t particularly like Spring (I’m one of them) and are unwilling to go with a provider that utilizes them. I don’t have any such compunction and haven’t had any Sprint-related issues with Virgin Mobile.

That said, the main players aren’t going to place their tenants customers on equal footing as their own. So if bandwidth starts getting tight, service will degrade for me before the guy next door with Sprint. How big of a deal is this? My wife has been on Virgin Mobile for a year now and the issue has been noticeable exactly once. Actually, that’s when we first found out about it, because we were out at the time and stopped at Best Buy because we thought it was the phone.

Fewer locations for service: That brings me to my next point. Locations to service your phone aren’t going to be as easy to come by. Cricket is probably the largest no contract provider out there and stores for them are starting to pop up, but the other companies rely on phone support. Virgin Mobile’s phone support is pretty good, but nothing beats being able to go in and talk to a person.

My wife’s last AT&T phone once started having problems and would randomly shut off. We had to drive 30 miles to the nearest AT&T store with a repair center, but in 10 minutes, they had determined that the battery was swollen and replaced it.

If I had a similar problem with my new no-contract phone, I would probably take it into Best Buy and they would ship it into Virgin Mobile, or even LG for diagnosis and repair or replacement.

Pay full price for phones: The carrot that the Big 4 use to get you to sign up for a multi-year contract is reduced price for most cellphones. Back in the days before smart phones, most phones were free and the most expensive one I ever saw was $50. If you had to replace a phone mid-contract, it could get expensive. But at new-contract time, it was back to free phone land.

Nowadays, free phones are mostly behind us, but there are still some pretty good discounts on phone prices. $400 phones become $100 phones. The previous model of iPhone becomes affordable.

But no-contract cell plans don’t have this carrot. That makes sense, because they also don’t have the stick! A budget Android smartphone is going to start around $100 and work its way up from there. The most expensive Android phone on Virgin Mobile’s website is $299

No free nights and weekends:My biggest disappointment with Virgin Mobile and no-contract plans in general has been no free nights and weekends and no free mobile-to-mobile calls. When I was one AT&T, and Verizon before that, I used those two features to keep my cell phone plan low. I could afford to have the 300 minute plan because I only averaged 200 “anytime” minutes each month. My longer phone calls have always been on the weekends anyway because that is when most people are available to talk.

Without free nights and weekends, my cell phone usage is over 300 minutes. It works out to just under 500 minutes last month. Doing the math, it seems that I spend about 5 hours per month talking on the weekends! So I have to utilize a larger plan. Luckily, an extra $10 gets me an extra 900 minutes. If I find myself bumping up against the upper level of a 20 hour rate plan, just shoot me. Because I will have been replaced by a pod person.

Conclusions

I realize this list seems awfully slanted toward the cons, making them seem like a bad deal. But the paying half price for the same plan is an incredibly large pro in my book! If I had to rank the above points, I would say they are: contract price (60%), nights & weekends (15%), phone price (10%), selection (8%), contract (5%), service (1%), and then network status (1%). So the pros get weighted at 65% (almost two-thirds) of my overall decision and the cons only 35%.

 

Do you have a no-contract cell phone plan? Would you give a different weighting to these factors?

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22 thoughts on “The Pros and Cons of No-Contract Cell Phone Plans

  1. Mrs.CBB is with Rogers in Canada and has been for over 10 years about 12 I believe now. She had a contract for 3 years with her phone when she first signed up but hasn’t had a contract since. She pays month to month and gets all the same perks and promos. She pays around $31 a month and has everything but a data plan as it’s not a smart phone. Her plan is $17.50 a month plus a bundle pack and taxes. Not too bad I guess, and the best part is she can walk away at any point she wants.
    Canadian Budget Binder recently posted..Reader Question: Homemade or Store Bought~ Which is Cheaper?My Profile

    • 12 years is a long time. I hadn’t even heard of cell phones back then! $31 for text and voice is a pretty good deal. I was paying $60 for that. Has she upgraded her phone in that time?

    • Hey, not bad! I had a plan on a smartphone and was paying around $38./mo. after some promo discounts. But after my 3 year contract was up, the rate resumed. Since Rogers didn’t want to offer anything to keep my business I walked. Its as if they don’t really care if they keep you or not. Consequently, I walked. Just plain dumb.

  2. I have a prepaid cell phone from T-mobile. What I love about prepaid is the fact that they are much much cheaper than plan phones. You have to be able to live with less, less calls, no data, etc.. but in the end they are way cheaper if you’re the type of person who needs to use them on occasion or mainly for texting.

    Prior to switching to T-Mobile I was with Net10. Net10 has the cheapest rates in U.S. at $15/mo. You can’t call a whole lot as you might imagine – perhaps this is the best prepaid plan out there for emergencies. Some older people don’t care for talking on the phone but want to have one for emergencies, I would highly recommend Net10. The coverage is okay, some blind spots but mainly good enough.

    I switched to T-mobile and pay $30/mo now because of the phone-to-phone free texting. My bf and I use it for texting only and it works great. We can still make calls at 10 cents a minute, but hardy do so anymore. Also, T-mobile has a good texting phone – Nokia X2. The only downside to the T-mobile prepaid is that your account must carry $15 minimum a pay period comes up or service is interrupted. If you want to make calls it’ll have to be more than $15, which is why I deposit $30 every time. As for coverage on T-mobile – it’s pretty good. I haven’t found any blind spots yet except for in my apartment LOL. But even “smart” phones lose signal in this place.. its like the doom portal.

    The biggest downside to all prepaid phones is lack of data of course. If I want to browse the web… well I’m stuck with having to get a plan phone otherwise I’m wasting money on prepaid.
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    • Our roommate has a pre-paid phone but he is horrible at managing his minutes. He’s always running out and without a phone until the next day.

      I love that you likened your apartment to DOOM.

  3. My husband just switched to the Virgin Mobile plan that must be the same as your wife’s. It’s about $37 a month for 300 minutes and unlimited text and data. We were on my office plan, but as I am selling the business, we had to get him off the plan. We had a bare bones, no data plan and it was usually around $90 for the both of us, but $20 of the bill was taxes and fees! That alone is enough reason to go with no contract. My contract is up in July. I think the business will continue to pay for my phone because I’ve agreed to take all after hours emergencies, but I still might switch to the Virgin plan to save them some money.
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  4. Phone plans get so expensive. I use my data plan a lot so I had to get unlimited texting and I keep a close eye on my usage so I don’t go over.

    • I turn WiFi on whenever I’m home or anywhere else that I know I’m going to be there a while and has free wifi. That way I can feel pretty certain that I won’t bump into my data limit. During the first month, I listened to Pandora while riding my bike to work one day a week. Round trip commute was 2 hours. 8 hours of listening to streaming music and probably 30 of surfing the web during down times at work and I still only reached 80% of my limit.

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    • Did you get that one you’ve been talking about that uses VoIP via WiFi instead of regular cellular service? I guess it can make sense to use different carriers to maximize your chances of having service during an emergency or even just if someone knocks over a tower.

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  7. This is a great breakdown – I’ve been debating ditching Verizon for years (our contract is up anyway, so we are free to make any move we want), but didn’t know anybody who’d actually done it and liked it. Thanks for the pros and cons!

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