Verizon Ends Two-Year Contracts, Say Goodbye to the $200 Upgrade

11 Aug Verizon Ends Two-Year Contracts, Say Goodbye to the $200 Upgrade

Verizon just announced that it is doing away with its cellular contracts and subsidized cell phones. What that means for you is you no longer have to wait two years to upgrade your phone, but it will likely cost you more when you do.

In the past Verizon, Verizon discounted the total cost of phones like the iPhone and Galaxy to around $200 to lock customers into a two-year contract. The real cost of the phone (around $600-$700 dollars for those models) was spread out over the life of the contract. Now, customers will have to pay full price for their phones at the time of purchase.

Verizon isn’t the first cell phone company to move away from subsidizing phones and ending contracts. T-Mobile did away with it a few years ago and AT&T is also pushing its customers in this direction.

So, What Does This Mean For You?

If you have Verizon, expect to see your service plan option change. Verizon is moving away from unlimited data plans and will be offering plans similar to the way we buy coffee:

–Small: $30/month for 1GB of shareable data 

–Medium: $45/month for 3GB of shareable data

–Large: $60/month for 6GB of shareable data

–X-Large: $80/month for 12GB of shareable data

Based on the new rates you may actually lower your monthly bill, depending on how much data you are currently using each month.

You can also expect to pay more upfront for a new cellphone with Verizon, so I would recommend buying a protective case for that bad-boy. You can also pay for your phone over a 24-month installment plan, but – like a car payment or mortgage – you’ll likely end up paying more than the original cost of the phone in the end.

If you don’t have Verizon, except to see other carriers follow suit. Phone companies don’t subsidize the cost of cell-phone in other parts of the world, so it is a practice that is uniquely American. Cell companies will want to shift consumers to paying for their own phones outright.

It isn’t All Bad  

The sticker shock of having to pay $700 may inspire many consumers to keep their phones longer than they might have under the old system, so phone companies may be forced to compete on cost over time. Also, new smartphone companies will be entering the market over the next year, giving you more inexpensive options.

The Recommendation

Now is a good time to stop keeping up with the Joneses. Be prepared to upgrade your phone when the old one stops working instead of when the latest version hits the market. Also, comparison shopping will be that much more important. If you stuck with one model of phone because of convenience, now may be a good time to see what else is available on the market.

– à bientôt

Charell Star | A Girl In A Dress