New Smartphone Math: Pay for Your Phone, Save on Your Plan

Don’t hesitate to ditch your contract, especially when it means keeping money in your pocket.

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(Image credit: Getty Images/iStockphoto)

In recent years, wireless carriers have vied for smartphone market share by offering flexibility: no-contract, lower-price service plans for customers willing to pay full price for a phone. Now, with nearly every cell phone user a smartphone user, providers are applying that model to all their plans, eliminating the hefty subsidies that longtime customers relied on to knock hundreds off the price of a phone. “The market was based on subsidies for such a long time that the U.S. consumer might think the price of the latest iPhone is $200,” says Brad Akyuz, a director at NPD Group, a market research company. You may no longer be tethered to a two-year contract, but you’ll pay the retail price for your new smartphone, either up front or in monthly installments.

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Kaitlin Pitsker
Associate Editor, Kiplinger's Personal Finance
Pitsker joined Kiplinger in the summer of 2012. Previously, she interned at the Post-Standard newspaper in Syracuse, N.Y., and with Chronogram magazine in Kingston, N.Y. She holds a BS in magazine journalism from Syracuse University's S.I. Newhouse School of Public Communications.