Are cell phone contracts worth the money? I did the money math.

My friend and I were having a discussion on just how much it costs to buy a Samsung Galaxy S III on contract vs the cost of paying cash for the phone and using a prepaid service.

Samsung Galaxy S III

Samsung Galaxy S III (Photo credit: John Biehler)

Since even the major companies (with the exception of Sprint, who will refer you to Virgin Mobile or Boost), offer prepaid now, prepaid purchasers no longer have to suffer the iniquity of bad reception, dropped calls, or missing text messages that was the plague of days gone by.

Prepaid customers are also no longer limited to the dregs of yesteryears technology since most carriers will sell the phone and, if necessary, the SD card to activate the phone.

So, the only question left is, in the long run, is it cheaper to buy the phone outright and go prepaid or get the discounted phone and go with a contract.

To the math!

Let’s start with my own carrier, Tmobile.

If I had purchased the Samsung Galaxy S III from Tmobile last year with a contract, I would have paid $299.99. But, lo and behold, I took a looksy today, and the phone is now down to $99.99 if I order it online.

If I purchase it outright from Tmobile prepaid (I don’t. Ebay is my friend!), the phone would cost me $549.99, a significant difference, right.

So, let’s compare plans, shall we?

The contract plan that I would most likely chose is $89.99 per month. The comparable prepaid plan, 4G and all, is $70.00.

$89.99 x 24 months = $2159.76

Adding in the cost of the phone, $99.99, brings the total to $2259.75

On the prepaid side, $70 x 24 = $1680 plus the cost of the phone is $2229.99.

The difference is only $29.76 in favor of the prepaid and I am not obligated to Tmobile for two years even if the service goes downhill.

Also, the price of the phone is on “sale” for a limited time only. If it goes to comparable of what the other major retailers are asking, the difference will go up $100. If it goes up to the price that Tmobile was originally advertising, the difference will go up $200.

Now, my friend has a Sprint contract.

According to Sprint’s website, the cost of Unlimited Everything is now $109.99 (up from the $99.99 that made it so appealing just a few years ago).

The cost of a new Samsung Galaxy S III on Sprint is, and has always been as far as I know, $199.99.

So the cost of a two year contract is $2639.76 plus the cost of the phone brings the total to $2839.75.

The difference between a Sprint contract and Tmobile prepiad is $609.76.

That’s a huge difference.

And, without even doing the math, I can tell you that the Verizon’s and ATT plans are so not for me.

Shared data plans?!?!

No unlimited data plans?!?!

But for those who want to see that math, here you go…

Verizon and AT&T contract is $199.99 for the phone and $70 for the contract for a total of $1879.99.

Again, no unlimited data for those of us who that makes a difference.

If not, then Verizon or AT&T may be your best bet, money-wise.

Verizon’s prepaid does not offer the ability to buy the S3 directly from the site but the prepaid is still $70.

I would go prepaid so I wouldn’t be locked into a contract and get my phone from Ebay, Craigslist, or Amazon, but that’s just me.

You actually come out cheaper with a Verizon contract when you add in the cost of the phone.

AT&T’s Smartphone prepaid is $65.00 which is $5 lower than the contract.

AT&T also did not offer the ability to purchase the S3 with your prepaid account online.

So, for my money, I will be sticking with my Tmobile prepaid account.

Not only is it extremely cost efficient in the long run but I am able to change my monthly account type with no penalties or repercussions during those lean months.

So, did I get the math right?

Did I miss any facts that might make a contract phone more appealing?

I’ve been known to be wrong…occasionally.

 

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