You’re about to get a few new options when it comes to cell phone plans.
Starting August 13, Verizon is switching from annual contracts to month-to-month plans, which could help you save a significant amount of money.
What Does This Mean for You?
The new system is meant to help simplify cell phone service, to make it more like buying a toaster than a car. You see what you need, select the features you want and pay a price that isn’t mysterious.
What this means for you depends on how you use your phone, so let’s dive into the details.
The Good Parts of Verizon’s New System
You won’t be locked into a two-year contract, so if you find a better deal or a carrier that better meets your needs, you can switch anytime.
You’ll have the freedom and flexibility to shop around and select the best carrier and plan for your situation. The new plans also have no down payments or activation fees.
The Bad Parts of Verizon’s New System
Heavily subsidized phone upgrades will become a thing of the past. You won’t be able to walk into a Verizon store and plunk down $200 for a shiny new iPhone — you’ll have to pay full price for your upgrades.
Why Verizon is Making the Switch
Verizon isn’t the only major carrier to move away from annual contract models. T-Mobile stopped offering annual contracts in 2013, and AT&T started phasing out their two-year contracts in June.
Contract-less phones are becoming popular among consumers; two-thirds of AT&T customers now select the no-contract option, CNN Money reported.
What Plans are Available?
If you’re a Verizon customer, you can keep your current plan or select one of the new options. New customers, however, are limited to the new plans, which charge separate fees for device access and data, talk and text.
Here’s a breakdown of the costs to get unlimited talk and text along with different amounts of data:
- $30 a month for 1GB of data
- $45 a month for 3GB of data
- $60 a month for 6GB of data
- $80 a month for 12GB of data
All that data doesn’t have to be just for one person, though.
You can share your data plan with others and connect up to 10 devices, but you’ll have to pay a separate monthly fee for each one. This fee ranges from a $5 charge for smart watches to $10 a month for Jetpack mobile hotspots or tablets, and $20 per month per smartphone.
If you’re not sure whether it’s cheaper to switch from your old plan to one of the new plans, it might make sense to keep your current plan for a while. You can switch to the new ones anytime, but you can’t switch back to the old one if you don’t like your new plan.
What Happens When I Want to Upgrade My Phone?
For years, if you were eligible for an upgrade, you simply had to walk into a store or go online to select a new phone. You could just sign up for a new two-year contract and receive the phone at a heavily subsidized rate.
Under the old system, even a brand-new iPhone 6 could be yours for $200 and signing on the dotted line for two more years with the carrier. The same phone costs $649 when it’s contract-free and unlocked, or not tied to a particular carrier.
On August 13, this option will become a thing of the past. Now, you’ll either need to pay the full cost of the device up front, or commit to a monthly installment plan over a two-year period. However, the latter option requires its own two-year commitment, which makes it hard to switch providers and might defeat the purpose of going with a monthly plan.
So which option is a better deal?
How to Save the Most Money With Verizon’s New Plans
The best way to save is to hang on to your old phone and purchase a large data plan (assuming you need the data, of course), according to CNN Money.
A customer who uses 12 GB of data each month with one smartphone on the account would pay $140 per month under the old system. But the new plan would cost just $80 for the same 12 GB of data, plus $20 for the smartphone access. That’s a savings of $40 per month, or $480 per year.
How else can you save with this new system?
Get a New Phone Today
If you’re eligible for a Verizon upgrade and you want a new phone, get your upgrade by Wednesday to take advantage of the subsidy.
Keep Your Phone
If you’re paying upfront for the cost of a phone (or spreading out the cost over two years), it makes the most sense to hang onto your phone longer.
Shop for Used Phones
When it comes time to swap out your smartphone, buy an unlocked used phone rather than splurging on a new one.
Consider an Android
Android phones tend to be less expensive than iPhones. Compare prices and features before you buy to find out what saves you the most money.
Keep an Eye on Your Data Use
Since these new plans are month-to-month, you can switch every month if you want to. Watch how much data you use and make sure to get enough (or you could face overage charges), but not more than you need.
What Other Ways Can You Save?
No doubt, some customers will find the best way to save is to leave Verizon and other major carriers altogether. You have a number of other options to save, including:
Select a Low-Cost Carrier
Consider migrating to a prepaid low-cost carrier, such as Cricket, that could save you money.
Cricket’s prepaid service comes with a basic plan for $40 per month for 500 MB of data to a pro plan at $60 each month (for 5 GB of data). Republic Wireless and Freedom Pop offer other options for saving.
Ditch the Data
Get rid of your data plan altogether and save up to $1,400 a year by using free Wifi for your connectivity needs.
Your Turn: What do you think of these new Verizon plans? Will you make the switch?
Kristen Pope is a freelance writer and editor in Jackson Hole, Wyoming.