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3 Ways To Save When Buying a New Smartphone

Posted April 17, 2013 by Joe Pawlikowski to Frugality 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

Purchasing a new smartphone can be an exciting experience. Imagine taking a laptop from five years ago and shrinking it to fit in your pocket. That is the essential nature of new smartphones. They possess unprecedented power in such a small, portable device. With exciting new releases from big names like Apple and Samsung, it seems that everyone is pining for the new-new thing.

At the same time, shopping for a new smartphone can cause sticker shock. For starters, the device itself isn't cheap. A new high-end smartphone will run the average consumer between $200 and $300. There's a catch, too: that's actually a fraction of the phone's actual cost. Your cell phone carrier subsidizes the cost of the phone, which can run between $500 and $700 at retail. In exchange, you have to sign a two-year service agreement -- at prices inflated so that you pay back that subsidy during the two-year term.

That's the bad news. The good news is that consumers have many opportunities to save along the way. While there are certain little tricks to saving pennies here and there, presented here are three tips that can help consumers save big dollars on their cell phone and service purchases.

1. Pick the carrier first

While a smartphone might cost you a good deal of money up front, the real cost comes in the form of your monthly service fee. You can pay as little as $40 per month with some carriers, or as much as $120. With such a large range there are many ways to find savings. Going with the correct carrier for you is the primary one.

Different carriers have different coverage areas, so you have to choose one that is strong in your area, regardless of price. Once you've identified those carriers, make sure to check out their monthly service plans. You might be surprised to find that service from a carrier such as MetroPCS are far better than those from a larger, better known carrier.

Other factors to consider include features, price per unit of data, and reliability. Once you have researched those factors you can then identify the carriers and plans that fit your needs. That's when you can identify the carrier that will provide you with the best price.

2. Consider prepaid

The difference between a company such as MetroPCS and one like Verizon is service tiers. Verizon is a postpaid carrier that works with heavy device subsidies. As described above, you might pay Verizon only $200 up front for the phone, but a decent individual plan can cost you $100 per month. The equation is different for prepaid carriers.

MetroPCS provides service on a prepaid basis. That means you sign no contract when purchasing a new phone and service plan. Instead you pay ahead for a month's worth of service. Because these carriers don't ask for a commitment, they also don't subsidize the phone. You therefore don't have to pay back a subsidy with your monthly payment, making prepaid monthly rates cheaper.

For $60 per month you can get the highest level of prepaid service from MetroPCS. T-Mobile is starting to operate this way with its Un-Carrier campaign. Customers have to pay more up front for the device, which can hurt, but the lower service fees make it an attractive long-term option. If you pay the full $550 for the Samsung Galaxy S3, then you can pay $60 per month for unlimited talk and text, plus 2.5 GB of data, for a total two-year cost of $1,990. The same setup with Verizon (with only 2GB of data) will cost you $2,600.

3. Pick a data-friendly phone

All smartphones from T-Mobile might run on the same network, but not all smartphones on T-Mobile consume data at the same rate. Android and iPhone in particular are notorious for their heavy data consumption. Choosing one of those phones, then, can lead to your needing a higher tier data plan, which will cost you considerably more every month. It ruins the above equation, where you can save big time with a reasonably priced service plan.

The biggest problem is that there aren't many viable alternatives on the market. Windows Phone users don't consume as much data as iPhone or Android customers, but that is largely because Windows Phone doesn't have nearly as many data-consuming apps. BlackBerry has always been known for its data-compressing technology, so its new line of BlackBerry 10 phones can provide some relief from heavy data consumption. Because almost all major carriers now offer these new phones, there is no question as to where to get a BlackBerry 10.

Older smartphones, too, consume less data than newer ones. That's in large part because newer ones operate on 4G LTE networks, which deliver data faster and more efficiently than 3G networks. Yet sticking with a 3G-only phone is one way to ensure that you don't consume more than your allotment of data, which keeps your costs down.

Finding a bargain on cell phone service has become more and more difficult in recent years. As AT&T and Verizon grow larger, they gain more power in dictating the norm for service pricing. Other carriers, who wish to compete on cost, might find it impossible to do so. For the time being there are still some deals to be had. It's best to seek them not now, while they're still viable.

About Joe Pawlikowski: Joe Pawlikowski has written and edited articles about mobile technology since 2007, when he wrote for the BlackBerry site BBGeeks.com. He now writes at MobileMoo.com, covering all mobile technology, including smartphones and tablets. 

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