Changing your mobile plan: 4 things to know before terminating a contract

Now is the perfect time to buy a new mobile phone plan.

Consumers are using more cellular data than ever: 3.3 GB per month, up from 2.7 a year ago, according to NPD Group. Because of this – or maybe because of this change – mobile carriers are coming up with increasingly larger datasets. And as operators offer more generous packages, increased competition has pushed prices down.

The result? You will likely find that your plan, or a very similar plan, or an even more generous plan, is now offered at a lower price.

This is true even with the most expensive carriers. Verizon, for example, now offers a line with 6 GB for $ 5 less than last year (making it one of the Money’s Best Mobile Phone Plans of 2016, winner for fast and wide coverage).

And for the first time, you might be able to take advantage of these discounts as carriers are phasing out two-year contracts. Only Sprint still offers them for the new plans. “Users are no longer bound by contracts,” says Brad Akyuz of NPD Group. “They have the option to change for any reason. They should always keep that in mind.”

The change can be confusing if you haven’t bought a plan for a while, but gives you a lot of freedom.

To find the most affordable plans that meet your needs, check out our best choices, Where use our tool for even more personalized results. Then follow these steps to take a step.

Step 1: Calculate the cost of departure.

While it is difficult to get a new two year contract, you could still be on an old contract plan. And it can be costly to get by.

Historically, cell phone plans have worked like this: you got a big discount on your phone – say, you only paid $ 200 for a phone worth $ 650 – if you agreed to stay with it. operator for two years. What you may not have realized is that you are paying the rest of the cost of your phone as part of your monthly service bill. So if you leave before the end of the two-year contract, you stick the rest of your phone bill on your carrier. Operators have attempted to deter this behavior by charging an “early termination fee” of up to $ 350 per line to customers who left early.

The early termination fee is usually prorated based on the time you have spent with the carrier. So call your carrier to find out how much you’ll be charged if you go.

Customers who are not under contract can also be trapped. On plans without a two-year contract, you must pay the full cost of the phone. But a lot of people are understandably hesitant to shell out $ 650 for a new smartphone (plus taxes and fees!) After paying around $ 200 for similar phones. The operators therefore offered another option: subscribe to a payment plan and spread the cost of the telephone over 24 months.

The problem: If you want to leave early, you usually have to hand in the rest of the installments before you leave.

Step 2: See if someone else will cover the exit costs.

If you still want to switch providers, you may be able to ask another carrier to pay your early termination fee or your installment plan balance, but read the fine print.

T Mobile, for example, will mail you a prepaid MasterCard covering your fees two months after your change, but you’ll need to hand over your old phone (to T-Mobile) and purchase a brand new device. This means that you can’t save money by bringing your own device or selling your old phone for cash. AT&T and Sprint Also have similar promotions, offering to cover switch fees of up to $ 650 per line if you trade in your old phone and activate a new one.

Step 3: Determine if you can keep your phone.

Once you’re free from your old plan, another industry change may help: If you love and own your phone, it’s easier than ever to move it to a new carrier.

“Previously, if you had a Sprint phone, you usually couldn’t take it with you,” says Marc Lowenstein, Managing Director of Mobile Ecosystem. “For the most part, that barrier is being eliminated as most phones now work on all LTE bands from all carriers. So you can move your phone from one carrier to another much more easily.”

However, there are exceptions: On Virgin Mobile USA and Boost Mobile, for example, you cannot bring any phone from any operator.

Before committing, check with your new operator that you can activate your existing phone on their network. Many carriers offer web pages where you can enter a combination of your old carrier, the type of phone you have, or your phone’s IMEI number (a unique identifier) ​​and see if your device will be compatible. You can get your IMEI code by simply entering * # 06 # on your phone keypad.

Before you can switch, you need to make sure your device is “unlocked” from your old carrier so that you can use it on other networks. If you have reimbursed your phone in full, your old operator is legally required to “unlock” it, but each carrier has a different unlocking process. AT&T allows you request a device unlock online. T-Mobile allows you to download a Device unlock app. Sprint devices released after February 2015 will be automatically unlocked when eligible; call customer service for help with other devices. And all Verizon 4G LTE devices are already unlocked.

Contact your carrier for more help, and off you go.

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About Sally Dominguez

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