Thinking of buying a new cellphone? Well, you also have to think about the cellphone plan you have to choose and there you go, find yourself stuck between the two options of choosing the cellphone by signing a contract with the cellphone providers to get your phone at a cheaper rate or simply buy an unlocked phone and choose monthly phone plans. Don’t worry! You’ll find a way out.
When you buy a new bike from a dealer, you get to decide which roads you can drive. You have the freedom . This is the case of unlocked phones. Buying a cellphone by signing a contract is like you buy a new bike from a dealer and you are restricted down to certain roads. In many other countries you simply buy a phone and then decide what carrier to use with it. These are called “unlocked” phones. In the US it isn’t as easy because carriers like Verizon and Sprint don’t support many unlocked devices. Here are the reason why you should never sign a cellphone contract again:
- Price of the device is the major reason why people opt for signing a cellphone contract. Most of the cellphone on an average cost around $500. Phone Providers like Verizon offer them at say $200 if you sign a contract. When you buy a subsidized/cheap phone you are paying for it every month. It may be cheaper up front, but in the long run you end up paying more. You can avoid this by simply buying the device at full price right from the start. The money you save every month will quickly add up to pay for the full cost of the device.
- You are locked in for an extra year’s worth of payments for service. If you try to get out after 12 months you still have 50% of the early termination fee to pay to get out.
- One of the main reason you should avoid signing a contract is because technology moves too fast. You may be bored using the same device or may feel old or slow using the same device for two years. If you look in the past two years, phones of changed and considering that, you would not like to sign a contact for the same.
- Early Termination Fee (ETF) is prorated at a smaller rate. A $350 ETF is lowered by $29.16 every month on a 12 month contract. On a 24 month contract it only goes down $14.58 per month. After 12 months on a 24 month contract you would still owe a $175 ETF to get out of your contract.
- Using the same phone for two years, may make you phone obsolete and at the end of two years it may worth a peanut. If you use a phone for 10 months or a year, you may at least cover up some amount for your new phone but in the previous case, chances are you take the wrong turn.
- When you sign that contract you are like a free bird. By not signing a contract they will do a lot more to keep you as a customer. You will have more power in negotiating to get discounts and deals. Just call them up and tell them you’re thinking about switching. You’d be surprised what they’ll do to keep you.
So, it is very clear. If you want to control your device and the services, opt for the unlocked phones. You have many discounts and monthly packages you can select from. Signing a contract will buy you an expensive phone at a cheaper rate but the cost of the phone is baked into your monthly fee, and by the time two years have passed, you’ve paid the full price for the device.