Liz Crenshaw's Guide to Consumer Issues, Recalls and More

No Contract Cell

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    NEWSLETTERS

    Liz Crenshaw and Consumers Union discuss the pros and cons of no-contract phone options.

    If you have a two-year contract on your cell phone, you're probably dishing out more than a hundred dollars a month for service.

    Now, Consumers Union, the publisher of Consumer Reports magazine, has us looking at no-contract cell phone options in a new way. If you’re considering making the switch, here are some things to consider:

    • PRO TO SWITCHING: No more termination fees. Since you’re not in a contract, there shouldn’t be a fee if you try to get a new phone or move to another service. Also, if you’re stuck in a two-year contract, some carriers like T-Mobile say they’ll pay early termination fees, up to $350 per line.
    • CON TO SWITCHING: You might have to pay full price for a new smartphone. For example, a 16-gig iPhone 5S will set you back $649. Most contract carriers subsidize the cost of new phones. For some consumers, that alone is reason to stick to a contract plan, according to Consumers Union.
    • PRO TO SWITCHING: You could save more money over time. Consumer Reports tracked the cost of 4 different wireless carriers over the course of two years. While the two no-contract carriers, Straight Talk and Cricket, charged hundreds of dollars more up front for the phone, after two years they cost about $1,000 less than contract phone plans from Verizon and AT&T.
    • (POTENTIAL) CON TO SWITCHING: Quality of coverage and service. Some no-contract companies buy space on the same networks as the biggest wireless providers. Yet, some base coverage on the type of phone you have.

    BOTTOM LINE: There’s no guarantee you’ll save money unless you sit down and crunch numbers for your individual needs when it comes to a cell phone carrier.