Why I’m switching cell phone carriers when my contract is up next summer

Last June, I switched from a prepaid T-Mobile cell phone + Vonage combination to a two-year contract with another cell phone carrier. I made this decision because I had decided I wanted a smartphone, but I was tired of the poor quality of the ones that were reasonably priced with a prepaid account.

With T-Mobile, I was spending:

  • $36.69 on Vonage (I paid yearly to save somewhat)
  • $32.85 including taxes on average per month adding to my pre-paid account
  • $69.54 total

Then I spent $220 including taxes on a new phone and started spending $85/month, an increase of $15.46. Multiply that over the 24 months of my contract and that’s $371.04, ignoring the cost of the phone.

I don’t use much data each month – most of my usage is really while on wi-fi and it’s nice to have access to maps while I’m outside of the house. I have been averaging about 450 text messages per month, about 350 MB of data, and about 800 minutes.

If I switch back to T-Mobile pre-paid when my contract is up, I’d either go with either the $50 Unlimited Talk, Text & Web (reasonable speeds for the first 100 MB) or the $60 (reasonable speeds for the first 2 GB) plan.

If I switch back to T-Mobile pre-paid when my contract is up, I have the following options as of right now:

  1. $30 – 1500 minutes or messages with 30 MB of data (the plan that I was on before)
  2. $30 – Unlimited Web & Text with 100 Minutes Talk (first 5 GB at up to 4G speeds)
  3. $50 – Unlimited Talk, Text & Web (first 100 MB at up to 4G speeds)
  4. $60 – Unlimited Talk, Text & Web (first 2 GB at up to 4G speeds)
  5. $70 – Unlimited Talk, Text & Web (first 5 GB at up to 4G speeds)

Comparing these:

  • Plan #1 would most likely be a sufficient number of minutes and text messages, but it’s a bit low on data and could be expensive on the overage.
  • Plan #5 is definitely more data than I need.
  • Plan #2 doesn’t have enough minutes and the overage would be really expensive.
  • Plan #3 is probably a safe bet in terms of not having much overage and if I find that I repeatedly want to use more data than 100 MB, I could switch back and forth monthly between the $50 and $60 plans since I’m not locked into a contract.

If I alternate between plans #3 and #4, I would spend $595 less over the course of the subsequent 24 months than I would have if I was to re-sign my contract. If you add in the fact that many phones are $100-200 plus taxes even if you sign a contract, that’s $700-800 I have to work with.

If you wait until a nice Android phone has been out for a few months, you can usually get it unlocked for much cheaper than if you’d bought it right away. For example, the Galaxy Nexus is now only $349 plus taxes unlocked through Google.

Back when I signed my contract last summer, I was looking at two phones, one that cost $100 off-contract and one that cost $200 on-contract. I was really stupid and chose the latter and now I’m stuck with it for almost another year. The phone was so not worth the extra money and I’m really regretting it now.

Readers, what do you do for a cell phone? Are you stuck in a contract like I am?


24 thoughts on “Why I’m switching cell phone carriers when my contract is up next summer

  1. I have T Mobile as well. The first contract I got through T Mobile themselves and the second time around I got T Mobile through Best Buy. Best Buy’s cell phones were cheaper and their customer service better. At the time I signed the contract they still had their unlimited data plans which I love. Free texting is a useless offer to me since they are so many ways around that with a smartphone.

    • I was actually super happy with T-Mobile’s prepaid services. I really regret switching carriers for a “nice” smartphone now, so I’m looking forward to being able to switch back when my contract is up.

  2. I avoid entering a contract when I first returned home back in May. I use a pre-paid plan through verizon. I try to keep the bill at 30.00 a month, but sometimes it goes over. I’ve found it comes down to modifying your behavior. It is just a simple talk/text plan, no data. I enjoy the data plans, but not enough to pay the higher prices.

    Have a great weekend!

    • I’m with you on enjoying the data plans, but not enough to pay the higher prices. I think I’ve definitely learned my lesson now. Hope you’re having a great weekend!

  3. I use an iPhone and while I am technically stuck in a contract I am happy with my service so it doesn’t bother me too much.

    However I rarely use all my voice plan and never come close on data so I do wish there was a cheaper minimum plan!

    • I definitely wish there was a cheaper minimum plan too! I did my research and picked the cheapest one after employer discount before signing a contract at least, but it still spending $85/month seems ridiculous to me.

  4. I have an old fashioned flip phone. Around $75-80/month for two phones. We call up every time our contract renews and ask for money off. Right now the employee discount through the university that we didn’t know existed until we called Sprint is the best deal.

    • I had a nice rectangular phone that I loved. I love the employee discount I have! It saves me about $10/month. Buying this phone was definitely lifestyle inflation. I think something closer to an iPod Touch might be more what I want – data while on WiFi – but with the added ability to occasionally use data.

  5. First, I want to say it is a LOT harder to find a good cellphone deal in Canada. Even still, my plan is only $50+HST a month. It’s got everything I need – local minutes, some long distance, My10, voicemail/call display, data, ultd texting. And I got the BlackBerry Bold 9900 which is a premium phone and is VASTLY better/easier for getting stuff done than an iPhone. If you don’t want to get stuff done and just want to look cool/hip, then the iPhone is definitely your best bet.

    • My plan is $85/month with taxes. EIGHT FIVE DOLLARS. Yours is $50+HST – that’s much better. For what the US plans give you, ours are a good deal compared to what you can get, but I wish we had smaller minimum plans like you do.

      I don’t like Apple products much – I like the Android phones better.

  6. Did you see my post on Republic Wireless (linked)? It’s not a contract, unlimited data, and super cheap. Only downside I can see from what you wrote is that you don’t get a choice of the hardware. Since most of your usage is on wifi (mine is, too) it seems like a good model for you.

    • That sounds like an interesting idea! I still have almost another year on my contract and I would prefer to see how Republic works before switching. I read through the Yelp reviews and also found Ting Mobile, which looks interesting too: https://ting.com/

      With Ting, you select separate plans for minutes, texts, and data based on how much you think you’ll actually use and then they credit or charge you the difference to your actual usage on your next bill! That sounds pretty cool. I did some math and even with the most I’ve used, it would still be cheaper than Sprint and then it would be pretty cheap if I don’t use my phone much.

      Looks like I have some interesting alternatives to check out next summer!

  7. I agree with Joe; it is tough finding a good deal up in Canada, especially for smart phones. I am stuck in a contract for another year though, and will start looking at alternatives when it comes up for renewal. I currently pay $65 + tax for my phone, but I am definitely don’t use all of the allocated stuff.

  8. Until I started my job a year ago I had a prepaid dumb phone and spent $20 a month on it.

    Now I have an (ancient) iPhone 3GS through work and it’s on a business plan paid for by the company.

    I’m not sure what I’ll do if I leave – a smartphone is definitely a must but they don’t come cheap…

  9. My fiance also has an iPhone (4) and is on a $40 plan that kicks ass – he got in at a time when Vodafone was doing a killer deal and when they recently tried to upsell him he explained what he currently gets, and the new plan would have offered LESS. The guy agreed he had a plan that is pretty much unbeatable.

    That said he’s been going a little over the past few months so we need to rein that in and make sure he pays it on time every month – something he’s been a little slack about (and why I was initially reluctant for him to go contract rather than prepaid) and now that they’re introducing late fees, it’s more important than ever.

  10. I have option 2 on T-mobile. The web special with new activation. It’s pretty amazing and fast. I go over the talk minutes often but that’s 10 cents a minute. You can activate a Skype or Google voice account and that will be over your data instead of voice.
    I typically spend between $30-35 a month. With unlimited data and a Google Nexus phone it’s great. I can even use the phone as wifi for my laptop.

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