Two Year Contract or Prepaid? What's The Better Value?

In the market for a new phone or looking for a better plan? There is a good chance you may be overlooking one of the best deals. A common mistake that is made by consumers is to buy a phone that they really don't need and sign a two year contract. Is a two year contract really a good option? Just like choosing a phone, one must consider what type of plan they really need. Is the phone being used for work or pleasure? Is the phone only being used in case of emergencies? Is the phone a present for that son or daughter that is college bound? Is an Apple iPhone the right choice or is it marketing at work? If the phone will only be used for emergencies or just to chat then a simple cellphone is all one really needs. Buying a smartphone would be a waste of money. What if you've done a lot of consideration and figured that you need more then jut a simple cellphone, and actually will use data more then you will to talk? If this is the case, there are a lot of factors that will need to be considered. The first question of course will be what smartphone to get. The Apple iPhone is on the list for most consumers. Most carriers are selling the 16GB Apple iPhone 4S for $199 with a two year contract. This sounds like a great deal and very few high-end smartphones can be purchased lower then $199 with a two year contract. Another option is an Android smartphone. Unlike Apple's iPhone, there are many Android powered smartphones to choose from. While not the most powerful Android smartphone, Google's Galaxy Nexus by Samsung is a good choice. Since it's a Nexus phone, it was also the first one to get the new Android 4.1 Jelly Bean OS. It also compares fairly well with the Apple iPhone. Google is selling the Galaxy Nexus from the Google Play store website at $349. This puts the advantage in iPhone's court since the Galaxy Nexus cost 150 more. After choosing the smartphone, the next step would be to choose the plan that best fits the user. AT&T has a one time activation fee of $36.00. The smallest Talk plan is 450 minutes for $39.99/ month. There is a 30MB data plan for $20 and a 3GB data plan for $30/month. We will pick the 3GB plan since our scenario is a consumer that will be using data more than calling. This brings the total for a Apple iPhone 4S at $305.98. On Virgin Mobile, a prepaid Sprint MVNO, an iPhone 4S will cost $649.99. There is no activation fee. The closest plan is the $35/month that comes with 300 minutes and unlimited messaging and data. Virgin does use throttling and caps "full speed" at 2.5 GB per month. This brings Virgin's total to $684.99. Now let's look at that Galaxy Nexus by Samsung. It's an unlocked GSM phone, so we'll be looking at T-Mobile's Monthly 4G prepaid plans. Like Virgin, T-Mobile also uses throttling. T-Mobile Monthly 4G unfortunately doesn't have a voice plan that comes close to AT&T's two year contract or Virgin Mobile. The closest plan is T-Mobile.com and Wal-Mart Exclusive $30/month plan that comes with 100 voice minutes and unlimited text and web, but you're limited to 5GB of 4G data. A SIM card will need to be purchased from T-Mobile's website for $0.99. This brings T-Mobile Monthly 4G's total to $380.98. Out of the three, the Apple iPhone 4S on AT&T with two year contract has the lowest upfront cost. Virgin Mobile has the highest upfront cost of the three. Now lets compare the monthly cost of the three. AT&T would be $69.99 per month and $769.89 for eleven months. Virgin Mobile is $35 per month, but there's a $5 dollar discount if you allow them to automatically charge your credit card. Eleven months on Virgin would be 385. T-Mobile is $30 per month and $330 for eleven months. The monthly cost really adds up and iPhone on AT&T comes out as the most expensive. After one year, the iPhone on AT&T will cost $1,075.87. Virgin Mobile's total is $1,068.99. T-Mobile comes out the cheapest at $710.98. Despite the Galaxy Nexus being an unlocked phone, unlocked phones are more expensive, the Galaxy Nexus on T-Mobile Monthly 4G came out to be the cheapest option.