The Cash Cow Couple currently part of a so called “family plan” offered by AT&T with a total of 5 lines. Lady Cash Cow gets a big work discount that reduces the cost of the plan, but if her family wasn’t already committed in the contract, we would look elsewhere.
The cost of cell phone plans (namely the big brand 2 year contract plans) can be staggering. I’ve recently discussed my cell phone plan findings with a few friends and almost fell out of my chair when I heard what they were paying.
The good news is that the market has recently opened up. You no longer have to sign on for 2 years of wallet devastation through the major providers (AT&T, T-Mobile, Verizon, Sprint). You can simply pay for what you use, no contract required. Meet the MVNO…
A Mobile Virtual Network Operator (MVNO) is a company that offers cell phone services by reselling the mobile services of another carrier, often with certain limitations, at a lower cost. In the U.S., there are MVNOs that resell AT&T, T-Mobile, Sprint, and Verizon services at a lower cost than you can obtain service directly from any of them. There are usually very few differences between the services provided by an MVNO and the services provided by the major carriers. What we’ve found is that the MVNO providers often carry the cheapest cell phone plans.
I lose my mind when I hear people complaining about the inconvenience of cheap prepaid cell phone plans. There is nothing worse than the whiney friend who complains about a one bar drop in reception or data speed after making the switch to a provider that lowered their monthly bill by 70%. So before I dive into the options, I want to address the common objections to what I’m about to present.
- I need data, and lots of it. Well, you may or may not. I’ve survived 8 years of cellular use without any data plan (on a flip phone). If you are worried about data, you almost certainly have a smartphone Your smartphone almost certainly has WiFi. WiFi is almost certainly available at home, work, school, and public hang-out sites, FOR FREE. Many people (excluding business owners, road warriors, or select others who must stay online) do not NEED data plans at all. It’s all how you prioritize. Facebook, Twitter, and (usually) Email can wait while you commute. If you are out and about, bored, go read a book! (no Wifi required)
- I need unlimited minutes. I’m ALWAYS on the phone: Rethink the whole thing. Your cell phone is a tool. That tool’s primary use is urgent or required communication. There is no need to spend hours on a cell phone. If you are at a place with WiFi, voice over internet (VoIP) services (Skype is one) allow unlimited talking for free (or really cheap). Where high speed internet is available, communication is dirt cheap. That means you don’t need to use your cellular minutes at all. Google Talk allows free calls and texts on an existing smartphone via the internet!
- I sent 35,000 text messages last month. That’s truly impressive. But guess what, text messaging is a cash cow for the cellular provider, not you! A single SMS text message is roughly 140 bytes in size (actually 1120 bits -> so 8 bits to 1 byte, 1024 bytes to 1 kilobyte, 1,048,576 bytes to 1 megabyte, 1120 bits = 140 bytes). That means you can send over 7,000 text messages per 1MB of data. So unlimited texting should basically be free, right? Well it’s not. It’s pretty pricey. Don’t fret, you can freely text away if you use Google voice, Kik, or KakaoTalk. Yes, free.
As we take a look at available plans, you need to know what you spend on what services each month. Once you know that, you can compare your current plan with the plans I’m about to show you with this Cell Phone Plan Calculator.
As you probably know, AT&T and T-Mobile (GSM providers) utilize a sim card. All MVNO providers which use their services will also use a sim card. This makes switching plans really easy.
The cheapest way to enter a new prepaid service that uses AT&T or T-Mobile towers is to simply buy the correct sim card and put it into your existing phone that you own.
If you need a phone, you can get good unlocked phones on Amazon or Craigslist.
- Example: You decide to switch from AT&T to AirVoice Wireless (see below). You buy an AirVoice sim card on Amazon and put it into your existing AT&T phone. It works perfectly because AirVoice uses AT&T towers.
Sprint or Verizon (CDMA providers) MVNOs require an old phone that is in good standing from past contracts or a new phone purchase, as they don’t have sim cards.
Cheapest Cell Phone Plans:
Republic Wireless: (Update: This is the plan my parents are using. Read my detailed Republic Wireless review for more info) A relatively new idea, the provider leverages the power of Wifi to cut costs for users. They offer an integrated VoIP and cellular service for a discounted price. The have recently redone the the WiFi and cellular integration, which has greatly enhanced the service. Voice and text roaming is allowed on Verizon.
- Cost: Plans range from $5-$35 per month for unlimited talk, text, and data. No contracts required. Customers are forced to use Wifi whenever possible though automatic connection on the phone.
- Phones: Republic Wireless requires you to purchase their phone, the Motorola Moto X for $299.00. It’s an outstanding phone and is priced nearly twice that amount elsewhere without a contract.
StraightTalk: Straight Talk has been in the market for quite a while and is still one of the cheapest cell phone plan providers for unlimited usage. SIM cards are available for the AT&T and T-Mobile networks if you bring your own cell phone.
- Cost: $42-$43 per month for unlimited talk, text, and data if you buy the 3 or 6 month packages at Straighttalk.com.
- **While touting “unlimited” data, Straight Talk has been known to slow the data speed if usage is more than 2.5GB per month. If you exceed 5GB, they may cancel your service for the month.
- Phones: If you buy a phone from the Straight Talk site, they decide on which network is best in your area. The easiest option is to buy an AT&T or T-Mobile SIM card from StraightTalk and bring your own phone.
Airvoice Wireless : Probably the cheapest AT&T cell phone plan for basic voice/text service. No roaming allowed.
- Cost: 4¢ a minute, 2¢ a text, and 33¢ MB data with 30 day refills. OR $30.00 unlimited talk and text plan.
- Phones: Airvoice offers a SIM card that will work in any unlocked GSM phone or any AT&T phone.
PlatinumTel: Reputable company and probably the cheapest T-Mobile provider for basic talk/text. No roaming allowed.
- Cost: 2¢ a text, 5¢ a minute, 10¢ per MB of data. $10 lasts for 60 days of service (or until you use the money).
- Phones: A good selection is available through PlatinumTel or SIM cards are available to use in any unlocked GSM phone or T-Mobile phone.
PagePlus: Not the best overall option, although one of the only available through Verizon.
- Cost: $12/month for 250 minutes, 250 text messages and 10MB of data. Other higher priced plans aren’t great.
- Phones: You can bring in a few clean Verizon phones, or buy from their site.
Breaking down the Savings
Someone transitioning from a $80 per month AT&T plan to a $10, 250 minute Airvoice Plan saves roughly $70 per month. Compounded over 10 years at 7%, that individual would save $12,390!
I’m certain that other readers have valuable input on the subject. Did I miss any cheap cellular providers? What are the cheapest cell phone plans?