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Time to break up with your smartphone?

Man breaking up with this smartphone.This summer, my smartphone and I celebrated our two-year anniversary. We didn’t do anything fancy to celebrate—just sent a few text messages and watched a video on YouTube. To me, it’s still the same handheld device that took my breath away in the Verizon store two years ago, but lately I’ve been wondering: Is it time to move on?

In 2011, my wife and I decided to break away from our respective family plans, join forces, and sign up for a plan of our own. We paid Verizon about $400 for two brand new smartphones—an HTC Thunderbolt and an iPhone 4—and signed up for a two-year contract. Without a contract, we would have paid up to $1,400 for the phones.

Of course, Verizon didn’t give us a $1,000 discount out of the goodness of its heart—the company knew it would make the money back over the course of our two-year plan. Assuming Big Red collects all of the money it shells out for smartphone subsidies over the course of a contract, our initial cellphone discount added an extra $42 a month to our bill over 24 months.

But now that our phones are officially paid off and our contract is up, what are we paying an extra $42 a month for?


And I know we’re not alone. Every consumer who signs a cellphone contract is in the same situation when that contract ends, and deciding what to do can be tricky. To help, here are some options:

Option 1: Get a new phone with your current carrier

If you’re happy with your current carrier, but you want a new phone, consider this option. For the same monthly payment you’re making right now,* you can get a brand new smartphone—you’ll just have to pay the initial, subsidized price of the phone itself, possibly an upgrade fee, and re-up with your carrier for another two years or so. But at least the extra money you pay will be going towards a shiny new phone, and not one you’ve already paid for.

(*Writer’s note: Since I signed up with Verizon two years ago, the company has ended unlimited data plans and introduced pricier “Share Everything” plans.  To get new phones, we would have to go with a more expensive plan. On the other hand, if we wanted to keep our old unlimited data plan, we would have to pay the full, unsubsidized price for our phones. Long story short: Check with your carrier first to see if a new phone would change the monthly price of the plan you’re on.)

Option 2: Switch to your carrier’s prepaid plan

If you’re happy with your current carrier, but you don’t want a new phone, consider this option. All of the big wireless companies now offer prepaid plans, which can net you big savings without any change in service.

For example, under AT&T’s current pricing structure, the cost for a smartphone under a two-year “Mobile Share” contract is $95 a month, including unlimited talk, text and 2 GB of data. Under the company’s prepaid pricing structure, the price is $60 a month—for the same plan. That’s a potential savings of $420 a year.

Check with your carrier to see if you can migrate your existing smartphone to one of the company’s prepaid plans. (Note: Verizon does not offer 4G prepaid service yet.)

Option 3: Sign up for another carrier’s prepaid plan

If you aren’t happy with your current carrier, consider this option. Dozens of companies offer prepaid cellphone service, usually at much lower prices than the big wireless carriers. For example, Boost Mobile offers unlimited talk, text and data for $50 a month, but that price drops $5 for every 6 months you pay your bill on time (down to $35 a month). Find a prepaid phone plan that fits your usage, and then check with the company to see if your phone can be activated on its network. If you purchased your phone on or after October 28, 2012, you may have to ask your current carrier to “unlock” your phone before you move it to another network. (The FCC hopes to change that.)

If your phone isn’t compatible with your desired prepaid carrier, consider selling your smartphone back to your current carrier, or on sites like eBay or Gazelle, to help fund the purchase of a new phone. Just be sure to wipe all of the contacts, messages, and other stored data from your phone first.

Option 4: Switch to another contract carrier

If you aren’t happy with your current carrier, consider this option. If you don’t want to purchase a new phone, check with your desired carrier to see if your old device will work on its network. If yes, you may have to ask your current carrier to unlock your phone. If no, you’ll have to purchase a new phone from your new carrier.

Option 5: Keep your phone and your carrier

Of course, if you’re still happy with your current smartphone—or unwilling to shell out an extra $200 or so for a new subsidized phone—you can always stay with your current carrier and smartphone. Just because your wireless company tells you “it’s time to upgrade,” doesn’t mean you have to.