Are contract-free cellphones really cheaper? Consumer Reports breaks down your options

Don't Waste Your Money

Verizon, AT&T and T-Mobile each offer cellphone service without a two-year contract.

It may sound like a good deal, but Consumer Reports studied 78 options – offered by 12 different carriers – and found that being contract-free is not always a bargain.

"With no contract deals, you typically get lower monthly charges,” said Consumer Reports expert Margot Gilman. “But the plans can charge hefty price tags for the phones themselves."

Consumer Reports compared cellphone 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 hundreds less: $6,540.

But 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: $5,600 over two years.

And they'll save even more if they bring their own phones. The price goes down to $3,364.

"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,” Gilman said. “But that can cost little or nothing."

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

Need more information? Read a full breakdown of each plan’s pros and cons .

That way, you don’t waste your money.


Don't Waste Your Money is a registered trademark of the EW Scripps Co.

"Like" John Matarese on Facebook

Follow John on Twitter (@JohnMatarese)

Print this article Back to Top