How to Find the Cheapest Smartphone Plan

Shopping for the cheapest smartphone plan? The industry has become increasingly competitive in recent months, and major carriers have begun to offer strong incentives to attract new customers.

Smartphone plans can be expensive, but they don't have to be. Here are four simple ways to minimize your monthly bill.

1. Go prepaid
The nation's largest carriers -- Verizon (NYSE: VZ  ) , AT&T (NYSE: T  ) , Sprint (NYSE: S  ) and T-Mobile (NYSE: TMUS  ) -- tend to offer the best service, but they're also the most expensive. If saving money is your top priority, prepaid carriers such as Virgin Mobile, Boost Mobile, and Straight Talk generally offer the cheapest service.

Of course, there are obvious drawbacks. For one thing, the handset selection is usually very limited: High-end smartphones are generally unavailable. Worse is the roaming policy -- or total lack thereof.

For the most part, prepaid wireless providers don't use their own networks, instead relying on the networks of other wireless companies. In Virgin Mobile's case, that means Sprint's network -- and only Sprint's network. Regular Sprint subscribers have the option of roaming when they're away from Sprint's towers, but Virgin Mobile customers don't have that luxury -- their phones simply won't get service.

Still, if you can accept the limited phone selection and lack of roaming, it's virtually impossible to beat prepaid pricing.

2. Switch to a cheaper network
If you don't want to go prepaid, you can still reduce your monthly bill by switching to one of the less expensive major carriers. It varies, but in general, Verizon and AT&T tend to be more expensive, while Sprint and T-Mobile offer cheaper plans.

For example, for a new customer purchasing a single, new iPhone 5s, the total cost over two years would be:

  • Verizon: $2,600 -- $200 down payment, then a $100 monthly bill for two years, including 2GB of data and unlimited talk and text.
  • AT&T: $2,480 -- $200 down payment, then a $95 monthly bill for two years, including 2GB of data and unlimited talk and text.
  • Sprint: $2,120 -- $200 down payment, then an $80 monthly bill for two years, including unlimited data, talk, and text.
  • T-Mobile: $2,280 -- $650 for the phone (which can be paid in installments), then a monthly bill of $70 for two years, including unlimited data, talk, and text.

But you get what you pay for -- Verizon and AT&T tend to offer better coverage. Before switching, check your local coverage map.

3. Figure out how much data you really need
But no matter your carrier -- prepaid or not -- the easiest way to reduce your monthly bill is to buy a plan with less mobile data. At AT&T, a Mobile Share Value plan with one smartphone and 300MB of data is about $60 per month -- bump it up to 2GB and it jumps to $95.

But you're getting a smartphone for a reason, and carriers can charge you overage fees if you go over your data allowance. You want to select a plan with enough data to suit your needs, but you don't want to pay for what you won't use.

If you already have a smartphone, you can easily check to see how much data you use on a regular basis. If you have an iPhone or one of Samsung's Galaxies, a history of your data usage can be accessed directly from your phone's settings. Handsets from other manufacturers vary, but most phones keep tabs on your data habits. Failing that, there are a variety of third-party apps that you can install to monitor your data usage.

4. Buy your handset outright
Both T-Mobile and AT&T now offer plans that allow subscribers to reduce their monthly bills if they own their own handsets. This can mean keeping your old smartphone, buying someone else's used device, or purchasing a new handset outright.

For example, if you're an AT&T subscriber and your contract is about to expire, you can switch over to AT&T's Mobile Share Value plan. If you keep your old handset, you can get unlimited talk and text and 2GB of data for just $55 per month. T-Mobile offers plans at similar rates.

If you don't have an old smartphone to use on one of these plans, you could buy a used one from a website such as eBay -- prices vary, but an AT&T-compatible iPhone 5 generally runs around $300-$350. Alternatively, you could buy a brand-new handset outright. This doesn't make a lot of sense if you want the latest, most high-end devices (buying a new iPhone 5s or Samsung Galaxy S4 will run you about $650), but there are a number of cheaper options to consider.

Google sells its Nexus 5 for just $350, while Motorola is currently offering the Moto X for $330 and the Moto G for $179. Both the Nexus 5 and Moto X have been widely praised, while the Moto G is generally considered a great value.

Buying your handset outright will probably mean more money upfront, but over the long haul, it could save you a ton of cash.

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