T-Mobile Practically Giving Away Phones – Price Comparison with AT&T

Things are rapidly changing in the world of cellular telephones. T-Mobile has really started to shake things up lately – most recently by eliminating contracts.

Read our article about T-Mobile dropping contracts.

So I could walk into AT&T right now and buy a new phone for $200. I’d also be signing up for 2 years of service to get that price. Say I just want 450 minutes, unlimited texting, and 3GB of data… that’s $90/month.

Then I take my new phone over to T-Mobile and ask them to beat that price.

“Duh. You can get that same phone for $150 upfront and pay it off in 2 years at $20/month.”

But what about service? Can’t use a phone without a way to connect!

“You can take the SIM card out of your AT&T phone and just use that, or get service from us for $70/month.”

Wow, that’s cheaper than what I pay AT&T… but what do I get for $70?

“Unlimited everything! You get minutes, texting, and data… all unlimited.”

For the same monthly price, I get more for my dollar, and I saved myself $50 upfront on the cost of the phone by choosing T-Mobile over AT&T.

“Oh wait, we just opened up this new promotion that I forgot to tell you about. We can give you that same phone for zero upfront today if you just pay $5 more a month.”

They’re obviously trying to get more money from me. Whenever the carrier tells you it’s a good deal, they’re lying through their teeth, right?

“See! I just saved you an extra $30 on the cost of the phone, and you don’t even have to give me a dime today.”

What just happened?

So it’s roughly $150 more per year to have a comparable plan on AT&T over T-Mobile, unless you get unlimited everything which makes it closer to $625 more per year with AT&T for a similar plan. Also, T-Mobile’s contract is just for the device, not service. If I decided I wanted to go back to using AT&T, I could cancel T-Mobile service at any time without paying a penalty and keep my phone. But you’d still be making monthly payments on the phone, and AT&T won’t be giving you a discounted monthly rate for bringing your own device. In that situation, your’e better off taking a $1 smartphone on a contract with AT&T and then flipping it on eBay to offset the monthly cost increase.

My examples above were calculated using pricing for the Samsung Galaxy S 4. T-Mobile is offering the same promotion across all of their popular smartphone choices. In the chart below, “No Contract” pricing indicates a full price purchase to avoid any type of contract, which is the same final purchase price as if you used their previous payment plan of a down payment and monthly payment plan. For the new T-Mobile promo, you also need to commit to 24 monthly payments to pay off the balance due for the device, but you do not need a down payment. For AT&T, you need to commit to 24 months of cellular service to get the “Down Payment” subsidized price for the device.

As you can see, the new T-Mo promo isn’t always a better deal. Grabbing a GS4 saved me $30 using the promo, but a Galaxy Note II would cost $18 more just to avoid putting $150 down upfront. The promo only saves me $2 on an iPhone 5, but it’s nice to walk out of the store with it having put down zero dollars instead of $146. An HTC One costs $40 more in the end if you use the promo, so it might be smarter to just pony up the $80 down payment when you purchase the phone. Yes, you can actually get an entry-level Windows Phone for $120 brand new. Even the Lumia 925 is begging you to buy it, where the promo will save you $50 by not paying $50 to take it home.

Source: T-Mobile