Cell phone carriers are battling for your business by cutting prices, ditching contracts, and offering to pay your fee to switch. Act fast to lock in your savings.
If you’re unhappy with your cell phone service—and really, who isn’t?—now might be a unique time to either renegotiate your contract or move to a new carrier.
Your window of opportunity may be short, however, as carriers have reached a crescendo in an escalating battle over prices and plans.
The mobile business started to change about a year and half ago, when T-Mobile first said it would ditch contracts and stop subsidizing phones.
In April, after some tit-for-tat between companies, T-Mobile said it was getting rid of its data overage charges and doubled the data that consumers were allotted, among other changes, and offered to pay the often-steep switching fees carriers can charge to break contracts.
AT&T responded by lowering some of its package prices and debuting a new line of no-contract plans. Verizon last month began offering a new $60 plan that previously would have cost users $90. Both companies also offered deals involving data shared by a family of users.
Then, last month, Sprint changed its offerings to include more data usage than its rivals were delivering at the same price. T-Mobile countered with a low-price starter plan of $45 that comes with 2GB of data. And with the iPhone 6 launch on the horizon, carriers are trying to lure in new business—or keep existing clients.
The result of these changes? Savings can be dramatic.
James Pillow, 41, of Orlando, Fla., was lured recently to switch from AT&T to T-Mobile’s $50 unlimited text, talk, and data plan (which limits users to 1GB of data over its 4G network).
Pillow, president of the sports apparel company FanCastle.com, says he had been spending $98 a month on cell phone bills and didn’t want to constantly worry about extra data usage. Now his bills are $57. He had evaluated smaller companies, but says he was concerned about the reliability of their coverage.
“Since I travel with my job and with my family, it made sense to chose a national company with a national tower network for better coverage,” Pillow says.
To best take advantage of the offers, you need to go through the complicated math, as cell phone carriers notoriously make their packages difficult to compare.
Also, the best plan for you depends on how much data you want, whether you already own a phone and the number of users tied to your contract.
Here’s how to evaluate the offers:
Study Your Bills
What if you merely think you’re getting a bad deal? To know for sure, take the last six to 12 bills from your current service and see what you really use, says Jon Colgan, who runs a service called Cellbreaker.com that helps consumers break their contracts.
Ask yourself: How many minutes a month do you use the phone? How much do you text? How much data do you consume?
Pay attention to the fine print. A $100 plan doesn’t necessarily mean your bill will be $100. To know what your charges will actually be, you can go to a website like MyRatePlan.com or Whistleout.com to sort out what options you have within the parameters you’ve set.
Changing plans isn’t always necessary, says Jeff Kagan, an Atlanta-based industry analyst. The first place to start is with your own carrier. Make a simple, friendly phone call asking for a better deal.
“Don’t go in as an adversary. Go in as a partner,” he says.
The typical customer can expect to see their rate drop by 20% to 30%, Kagan says. If you have a particularly poor deal for your usage pattern, like paying per text when you’re a serial texter, you should be able to save far more.
Make the requests annually, Kagan says, rather than waiting for the end of a contract.
Your business could be worth something to a competitor, and without penalties, moving could be in your best interest.
“The ideal person to take advantage of this is someone whose commitment has ended,” says Northeastern University finance professor Harlan Platt.
That’s what Holly Johnson, 34, of Noblesville, Ind., did to find a good deal for her cell service last year. Johnson, who writes the ClubThrifty.com blog, switched her husband’s phone for the second time in two years, from Verizon to a local discount carrier to Republic Wireless, a carrier that relies on the use of WiFi to control costs.
Johnson says the bill is now $25 a month for a plan that includes unlimited talk, text and data, while the previous Verizon bill topped $100 a month.
One warning for consumers is that even though some carriers have limited-time offers to offset costs you incur for changing plans, there may be other hidden charges. Platt warns that carriers now try to lock in consumers by selling them phones on a payment plan.
Instead, you can go to a retail website that sells prepaid phones, like Amazon.com, and purchase one that will work on the company’s network that you’ll be using. That will ensure you’re a free agent and can move to another carrier of there’s a more tempting deal.
“There’s nothing special about AT&T, Sprint, T-Mobile, or Verizon,” Platt says. “They provide a commodity. What consumers need to do is make those phone calls and get the bills down.”