Contract or No-contract?

Choosing the cell phone plan that’s right for you.

Most Americans still have their cell phone plan with one of the four major carriers – Verizon, Sprint, T-Mobile and AT&T. Recently, however, the popularity of prepaid or no-contract plans has grown. Originally offered mostly by resellers, or MVNOs (mobile virtual network operators), now you can find them with the major carriers as well.

Should you make the switch to a prepaid or no-contract plan? And should you stick with one of the major carriers, or go with a reseller? With more than 80 MVNOs currently operating in the United States, you have lots of choice. Here’s some information to help you decide.

Prepaid or No-Contract – what’s the difference?

They might seem similar, but prepaid and no-contract plans are not the same. With a prepaid plan, you’ll pay up front for a top-up card that gives you a certain number of minutes. These usually expire within 3-12 months after activation. You will never get a bill. Prepaid plans are great if you don’t use much data on your phone, or if you use your phone only in emergencies.

No-contract plans still have a monthly bill, but these plans generally offer better options for access to unlimited talk, text, and data. For both types of plans, you can generally bring your own phone. If you want to buy a phone, you’ll need to pay for it all up front, and you might not have access to the best selection of new model phones.

Why have a contract?

Even though the cheapest cell phone plans are prepaid or no-contract, there are still a few reasons why you might consider plan with a contract. One of the biggest benefits to a contract plan is the stable cost. If you stay within the terms of the contract, you know exactly how much you’ll be billed each month. And if you want to get the latest model phone, and not pay for it up front, a contract will let you spread out the cost of the phone over the length of the contract – usually 24 months. Contract plans can also offer good deals for families, especially when you need to get new phones.

Major carrier or MVNO – how to choose?

Of the four national cell phone networks, Verizon is consistently rated best in overall network coverage, followed by AT&T and T-Mobile. Verizon has the best 4G coverage, while AT&T has the best 3G coverage. All MVNOs rent space on the four main networks. They purchase network service at wholesale prices, then pass the savings on to consumers. If you’re considering a plan with a reseller, always check to see which network(s) they operate on, and which phones they support on each network.

If you travel a lot throughout the country, national network coverage should be something that you consider when making your decision. Otherwise, look at coverage in the areas where you’re most likely to use your phone. If you need to have the most reliable network access possible, remember that the major national carriers prioritize network access for their own customers over customers who are accessing the network through a reseller. When mobile traffic is heavy, customers of resellers will be the first to be dropped from the network. If you live in an area with less coverage or have experienced problems with your cell service previously, you might choose to stick with one of the national networks.
Here are some of the best plans that are currently available:

Unlimited Data

If you have an iPhone, Virgin Mobile’s $50 Inner Circle Plan gives you 6 months of unlimited data for $1/month, with $9.99 up front. After the first 6 months, you’ll pay $50/month.

For Android users, T-Mobile’s One Plan offers unlimited data for $70/month, with $25 up front. If you stream lots of video, this plan might be for you: data is slowed down only when you exceed 50 GB/month.

Unlimited Talk and Text

ROK BLUE offers unlimited talk and text on Verizon’s network, with 1GB data, for $20 monthly.

ROK YELLOW gives you unlimited talk and text on the Sprint network, with 4GB of full speed data, for $30/month.

Prepaid Plans

If you’re willing to pay for 3-12 months of service in advance, MintSIM has some great options. Right now, for $25/month, you can get 3 months of 10GB full speed data on the T-Mobile network, as well as unlimited talk and text.

Family Plans

Boost Mobile offers four lines of unlimited talk, text and data on the Sprint network, for only $25 per line.

For a wide range of customizable talk, text and data plans, consider US Mobile.

For more options, check out our comparison tool here.