7 ways to cut phone costs

Save hundreds of dollars per year by making smart choices

Published: November 2013

Consider prepaid service

Pay-as-you-go plans used to come with limited service and bare-bones phones. Not anymore. Prepaid providers now have more smart phones, and some offer fast 4G connections. Our subscribers gave those services some of our highest scores for satisfaction.

If you’re not a marathon talker, texter, or Web surfer, you’ll usually come out ahead by paying only for what you use. You’ll probably pay more up front for a phone if you don’t sign a two-year contract, but the savings on service can more than make up for that over time. Or use a phone you already own and save even more. 

Be strategic when you surf

To keep from burning through your monthly allowance, beware of data hogs such as streaming video and music and playing games online. You can usually monitor data usage in real time using your carrier’s app, such as My Verizon Mobile.

Use Wi-Fi as much as possible—at home, in the office, or at places such as Starbucks, the library, or an airport—but avoid using insecure connections for sensitive tasks, including banking or bill-paying.

Check for discounts

AT&T, Sprint, T-Mobile, U.S. Cellular, and Verizon offer discounts to employees of companies that use their service. To see whether yours does, do a Web search for the carrier’s name and “employee discount.” You’ll be directed to a page on the carrier’s website at which you can enter your work e-mail address. If your company participates, you can expect a discount in the 15 to 25 percent range on qualifying equipment and plans.

Consider a family plan

It often pays to buy in bulk, and family plans (sometimes called share plans) usually provide a discount for buying service on multiple lines. For example, for the usage needs of one type of average consumer, Verizon would charge $90 per month for one line and $210 for four—a per-line cost of only about $53, or a 41 percent savings vs. buying four separate lines.

Sprint would charge the same customer $70 per month for one line and $50 per line for four, a 29 percent discount. ­T-Mobile’s 2.5GB family plan is attractively priced at about $28 per line per month for four phones vs. $60 for one. The primary line gets 2.5GB of data per month before speeds get throttled. The other three get 500MB, and you can add 2GB to each line for $10 apiece, still a bargain.

Wait to buy that hot phone

Resist buying the latest must-have phone until a newer model comes out and you may be able to get it at a much lower price. For example, if you bought the Samsung Galaxy S III from Sprint when it first came out, it would have set you back more than $200 up front. When the Galaxy S 4 arrived, the S III price dropped to $100, and it’s now $0 with most service contracts.

Go beyond the carrier store

Your local cell-phone store may be the first place you think of going to buy a phone, but you might get a better deal elsewhere. When we surveyed almost 9,800 Consumer Reports subscribers in 2012, Costco and Walmart were the only cell-phone retailers in our survey that received above-average scores for price. Costco is among the best venues for bargain hunters, provided you can find what you want in its limited selection.  

Think twice about add-ons

Like other service providers, cellular carriers try to lard on extras, including navigation, insurance, and GPS tracking of your children. Assess those offers carefully. You might be better off paying $1 per day for maps and directions only when you need them, rather than paying a $5 navigation fee every month.

And take a pass on phone insurance, which runs about $7 to $11 a month, or up to $264 over two years. Only one in five survey respondents had to replace a lost, broken, or stolen phone, so you probably won’t collect. If you do, you’ll face a deductible of up to $200, and the replacement may be a refurbished model. Better to hang on to an old phone in case you need a replacement until you qualify for the next upgrade.

And although keeping track of a child’s whereabouts may seem worth $10 per month, that’s true only if he or she always remembers to take the phone, keep it charged, and turn it on.

Editor's Note:

This article appeared in the January 2014 issue of Consumer Reports magazine.

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