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No Contract 6/22/14

Contract-free cell service used to be the hallmark of upstart and prepaid carriers. But with T-Mobile, AT&T, and Verizon all now offering no-contract plans, Consumer Reports crunched the numbers to see if they'll save you money.

"With no-contract deals you typically get lower monthly charges, but the plans can charge hefty price tags for the phones themselves."

Consumer Reports compared cell-phone plans for three types of people: an average, single-user; a low-use couple; and a high-use family of four. In all cases, Verizon is more expensive without a contract than with one. For the family of four, the contract-free "Edge" plan costs more than $7,200, for two years of service and four new iPhones.

With a two-year contract, that same family would pay $6,540. With AT&T, the family of four would actually save by choosing the no-contract service arrangement. T-Mobile's no-contract deal is even better for the family of four: $5,6000. And they'll save even more if they bring their own phones. The price goes down to $3,364 dollars.

Margot Gilman said, "Your phone has to be compatible with the new network, and you'll need to switch out the phone's SIM card for a new one, but that can cost little or nothing."

As for the low-use couple and the individual user, Consumer Reports says Consumer Cellular's no-contract service, with installment payments for the phones, is the best deal.

Consumer Reports is published by Consumers Union. Both Consumer Reports and Consumers Union are not-for-profit organizations that accept no advertising. Neither has any commercial relationship with any advertiser or sponsor on this site.

All Consumer Reports Material Copyright ©2014 Consumers Union of U.S. Inc. ALL RIGHTS RESERVED

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