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.
| Phone | Service | Total | |||||
| Upfront | Monthly | Monthly | Details | Upfront | Monthly | 2 Years | |
| AT&T | $200.00 | – | $90.00 | 450 Min, Unlimited SMS, 3GB Data | $200.00 | $90.00 | $2,360.00 |
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.”
| Phone | Service | Total | |||||
| Upfront | Monthly | Monthly | Details | Upfront | Monthly | 2 Years | |
| AT&T | $200.00 | – | $90.00 | 450 Min, Unlimited SMS, 3GB Data | $200.00 | $90.00 | $2,360.00 |
| T-Mobile | $150.00 | $20.00 | $70.00 | Unlimited Min, Unlimited SMS, Unlimited Data | $150.00 | $90.00 | $2,310.00 |
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?
| T-Mobile | Upfront | Monthly | Total Cost |
| Option #1 | $150.00 | $20.00 | $630.00 |
| Option #2 | $0.00 | $25.00 | $600.00 |
| Phone | Service | Total | |||||
| Upfront | Monthly | Monthly | Details | Upfront | Monthly | 2 Years | |
| AT&T | $200.00 | – | $90.00 | 450 Min, Unlimited SMS, 3GB Data | $200.00 | $90.00 | $2,360.00 |
| T-Mobile | $150.00 | $20.00 | $70.00 | Unlimited Min, Unlimited SMS, Unlimited Data | $150.00 | $90.00 | $2,310.00 |
| T-Mobile | $0.00 | $25.00 | $70.00 | Unlimited Min, Unlimited SMS, Unlimited Data | $0.00 | $95.00 | $2,280.00 |
“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?
| Phone | Service | Total | |||||
| Upfront | Monthly | Monthly | Details | Upfront | Monthly | 2 Years | |
| AT&T | $200.00 | – | $90.00 | 450 Min, Unlimited SMS, 3GB Data | $200.00 | $90.00 | $2,360.00 |
| AT&T | $200.00 | – | $110.00 | 450 Min, Unlimited SMS, 5GB Data | $200.00 | $110.00 | $2,840.00 |
| AT&T | $200.00 | – | $140.00 | Unlimited Min, Unlimited SMS, 5GB Data | $200.00 | $140.00 | $3,560.00 |
| T-Mobile | $150.00 | $20.00 | $60.00 | Unlimited Min, Unlimited SMS, 2.5GB Data | $150.00 | $80.00 | $2,070.00 |
| T-Mobile | $0.00 | $25.00 | $60.00 | Unlimited Min, Unlimited SMS, 2.5GB Data | $0.00 | $85.00 | $2,040.00 |
| T-Mobile | $150.00 | $20.00 | $70.00 | Unlimited Min, Unlimited SMS, Unlimited Data | $150.00 | $90.00 | $2,310.00 |
| T-Mobile | $0.00 | $25.00 | $70.00 | Unlimited Min, Unlimited SMS, Unlimited Data | $0.00 | $95.00 | $2,280.00 |
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.
| T-Mobile | AT&T | ||||||||
| Device | Previous Upfront | Previous Monthly | No Contract | Down Payment | Monthly Payment | Promo | No Contract | Down Payment | Monthly Payment |
| Samsung Galaxy S 4 | $150 | $20 | $630 | $0 | $25 | $600 | $640 | $200 | $0 |
| Samsung Galaxy Note II | $150 | $20 | $630 | $0 | $27 | $648 | $705 | $300 | $0 |
| Samsung Galaxy S III | $50 | $20 | $530 | $0 | $22 | $528 | $465 | $100 | $0 |
| HTC One | $80 | $20 | $560 | $0 | $25 | $600 | $600 | $200 | $0 |
| iPhone 5 | $146 | $21 | $650 | $0 | $27 | $648 | $650 | $200 | $0 |
| Sony Xperia Z | $100 | $20 | $580 | $0 | $25 | $600 | N/A | N/A | N/A |
| Nokia Lumia 925 | $50 | $20 | $530 | $0 | $20 | $480 | $475 | $100 | $0 |
| Nokia Lumia 521 | $30 | $5 | $150 | $0 | $5 | $120 | N/A | N/A | N/A |
| BlackBerry Q10 | $100 | $20 | $580 | $0 | $25 | $600 | $585 | $200 | $0 |
| Samsung Galaxy Tab 2 10.1 | $90 | $15 | $450 | $0 | $20 | $480 | $450 | $350 | $0 |
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
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