When Does It Make Sense to Buy a Mobile Phone Straight Away?
Just a few weeks ago, in Before Times, I received an email from a reader asking if it was worth using your tax return to buy a cell phone.
“My wife and I share the same data plan, and our iPhones are getting a little long,” this reader wrote. “We’ve had them for over three years now, and we’re not the type to renew just for that.” The reader said that buying two phones would not be a financial burden, and they usually keep the phones for three years. “Does it make sense to buy straight away or make a monthly installment?”
This is such a delightful departure from The Now Times that I couldn’t help pondering this reader’s dilemma. Also, a few weeks ago my own phone went down, forcing me to use an elaborate workaround to be able to make calls and text messages until my replacement phone was delivered to the pandemic mail.
But enough about my own problems. The reader’s puzzle does not depend on which phone to choose – we have a whole section for that – but on which payment method is the most efficient.
Basically, you have three options for purchasing a mobile phone:
- You can rent a phone from your carrier, with the cost of the phone added to your bill each month or elsewhere in your contract.
- You can pay for your phone by paying in installments separately from your phone bill.
- Or you can buy your phone straight away.
Andrew Moore-Crispin, head of content and brand for MVNO Ting , is an advocate of direct shopping.
Part of the reason is that you no longer need to buy a new phone every 24 months.
“The difference between what a $ 1,000 phone can do and what a $ 300 phone can do has narrowed significantly,” Moore-Crispin said. “It used to be thought that a $ 300 phone couldn’t match the latest and greatest, but the industry is seeing a lot of normalization.”
The old reason to rent a phone from your carrier was that you were almost guaranteed to have a stable upgrade schedule and a predictable monthly bill.
“The advantage of leasing is that you know exactly how much you pay each month,” said Moore-Crispin. Back side? “You will never stop paying.” But if you want the absolutely latest and greatest phone and can’t pay for it right away, you might want to sign up for this rental.
But if you’re thinking about leasing because you still feel like you need a new phone every two years, it’s time to ditch that line of thinking. “The two-year renewal cycle is dead for most people,” Moore-Crispin said. “Most people have been using their phones for over two years.”
A survey by Ting found that 30% of cell phone users keep their phone for two years, 47% of people store their phone for 3-5 years, and 8% store their phone for five or more years.
Only 38% of respondents purchased a phone from a telecom operator.
Another report from research firm NPD Connected Intelligence showed that in 2018, the average user refreshes their phone every 32 months.
Moore-Crispin explained that in addition to the artificial renewal cycle, many users are no longer enjoying the contracts. In the past, a toll-free phone was a major benefit when signing a multi-year contract, but consumers are realizing that the cost is showing up somewhere on their monthly bill.
So if you are thinking about cutting your budget , a good place to look is your mobile plan, which can include significant spending on the phone in your hand. Whether you’re upgrading to a prepaid plan or negotiating a better deal for your postpaid plan, you can probably save significant money by separating the cost of your phone from the cost of calls, text messages, and data usage.
Moore-Crispin said that if you decide to fund a phone to make it easier to make those investments easier, make sure you know what you’re signing up for. Many device sellers offer installments, but you need to be sure that you can meet the expectations set out in your agreement.
“If you can afford to buy a phone straight away, make sure it’s unlocked,” Moore-Crispin said. If it is locked, meaning it only works on one network, it negates the mobility from carrier to carrier that you may be looking for in the first place.