7 Smart Ways to Save on the Latest Smartphones

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Shortly after Apple's latest phone, the iPhone 6, is announced on Tuesday, people will be lining up in droves to pay any price and sign long, expensive contracts. They have their wires crossed.

On Tuesday Apple is expected to announce its latest smartphone, the iPhone 6. And that’s just one of several new smartphones being unveiled this month. Watch for new phones from Microsoft (Nokia Lumia 730), Sony (Sony Xperia Z3), Motorola Mobility (Motorola G), and Samsung Electronics (Note 4). PCWorld has details.

EMarketer, covering digital media, commerce and marketing, projected that 4.55 billion people will use mobile phones worldwide this year, and about 1.75 billion of them will use smartphones. It expects that nearly 70 percent of people worldwide will be mobile phone users by 2017, compared with 61 percent last year, and the number using smartphones will continue to increase.

That’s a huge market, with high stakes for phone makers. But don’t let the hype hypnotize you into making an impulse buy. There are ways to save on a new smartphone, as Money Talks News founder Stacy Johnson explains in the video below. After you’ve watched it, come back here for more ways to save.

Here are seven ways to save on your new smartphone purchase:

1. Wait a few months

Apple sold 9 million iPhone 5s and 5c models in the three days after those products were launched a year ago, according to the company. If you’re an early adapter or a tech professional, you may want to pay more to get your hands on the newest version immediately. Otherwise, hold off. Wait for sales and price cuts to kick in in about three months, says International Business Times.

2. Drop Apple

Loyal Apple customers get a lot of technology for their money. But Apple fangirls and boys miss out on budget-priced models offered by other companies. And since Apple keeps its software proprietary, its competitors can’t use it to sell rival products at lower prices.

3. Sell or trade your old phone

Your old phone is worth money. But sell soon to lock in a good price before new models depress your phone’s value, advises used gadget marketplace uSell.com.

Wall Street Cheat Sheet recommends:

Glyde, a marketplace where consumers can buy and sell smartphones and other devices, offers top dollar for flagship models. Users can receive upward of $425 for an iPhone 5s on Glyde.

Other marketplaces for selling and trading phones include:

4. Drive in a slightly slower lane

Take advantage of the price depreciation on old models caused by the new smartphone launches and buy one of the older devices. For example, I’ve been hanging on to my old paid-for iPhone 4 until after the iPhone 6 launch. I want to see if the new features might be game-changing for me. If not, I’ll instead wait for a deal on a souped-up iPhone 5s.

5. Sign a contract

The problem with rock-bottom phone service discounters is the prices they charge for popular phones. Wall Street Cheat Sheet says low-cost Cricket Wireless and Boost Mobile need no contract and offer low rates but charge astronomically high prices for phones.

Depending on how you use your phone, a contract may be cheaper. True, it locks you in. But you could save about half on the price of a new iPhone, Cheat Sheet says.

6. Shop around

Don’t automatically grab the deal your phone company’s representative offers you. Shop around online. And try big retailers like Walmart and Costco for lower prices.

7. Buy an unlocked phone

Buying an unlocked smartphone outright is cheapest. (“Unlocked” means it works with a number of carriers.) But not everyone can afford the high upfront cost. Phone networks subsidize the cost of a device to get it into your hands quickly. Your phone company recoups its money over the life of your contract. All of this makes smartphones seem cheaper than they really are.

Here is the cost of an unlocked 5s at the Apple Store:

  • 16 GB, $649.
  • 32 GB, $749.
  • 64 GB, $849.

Sellers at Amazon ask comparable prices.

The same phones purchased from the Apple Store with a contract from Verizon, AT&T or Sprint cost $199 to $399, not including other costs on a month-to-month payment plan.

However, much of the potential for saving lies in your ability to take advantage of cheaper no-contract service plans and the freedom to shift providers when another company offers a better deal.

Consumer Reports shows the prices in July 2014 of no-contract plans (1,200 talk, 5,000 text and 1 GB data) from AT&T Consumer Cellular, H20 Phone, Cricket Wireless, Sprint, Boost Mobile, Sprint, Zact, T-Mobile, Walmart Family Mobile, TracFone, StraightTalk, Page Plus Cellular, Verizon Wireless, Virgin Mobile, payLO Talk & Text and Freedom Pop. (Read the pros and cons of free cellphone plans).

Other advantages of buying outright

Price isn’t the only reason to own your own phone if you can afford it. Also:

  • You can use your phone on any network.
  • You can use networks overseas with the purchase of an inexpensive SIM card.

4 ways to save on your phone plan

The mobile talk industry is fiercely competitive today. Price isn’t the only concern, however. Coverage is crucial. Says one USA Today reporter:

In my travels, I was more likely to get high-speed data service with AT&T and Verizon, especially in rural areas. T-Mobile has improved in many cities. Sprint is still catching up. A plan with a large data allotment won’t mean much if you can’t use it. Also, if you travel a lot, only T-Mobile offers free data roaming outside the U.S. 

Here are five ways these industry rivalries can help you save money on a service plan:

1. Lower costs with a family plan

A family plan typically charges a standard price for the first phone line and discounted prices for additional family members, bringing down monthly costs. The more members, the lower the costs, usually. “Carriers like Sprint Corp. and T-Mobile US Inc. allow as many as 10 lines on a family plan,” says International Business Times.

Clark Howard’s website describes Sprint’s highly competitive “Framily” plan (you define who is “family”):

You can have up to 10 people on your plan for a flat $100. That includes unlimited talk, text, and 20 GB of data to share among the 10 lines.

The USA Today article identifies the best network plans for individuals, couples and a family of four.

2. Get rewarded for jumping ship

Termination fees, assessed for leaving a carrier before your contract is up, have made it difficult to chase competitive prices. But increased competition in the industry gives users new freedom. For example:

  • T-Mobile pays up to $350 per line, up to $650 per line when you trade in a device, in early-termination fees so you can ditch your contract and join them.
  • Sprint has slashed prices on family plans and pays $350 in early-termination fees for customers who switch. But The Consumerist says Sprint’s network suffers from slow download speeds.
  • T-Mobile offers a free year of high-speed data for users who lure a friend to switch from another network. Both users get the free data.

3. Consider an installment plan 

Bypass the typical month-to-month service plan and instead ask for an installment plan that lets you skip some extra charges found in two-year contracts, says International Business Times:

Many carriers offer plans where subscribers pay off the value of their new device in monthly installments in lieu of a two-year contract. These plans tend to be cheaper month-to-month than a two-year contract and often don’t include activation or upgrade fees. Such plans include Verizon’s Edge plan, AT&T’s Next plan, Sprint’s Easy Pay plan and T-Mobile’s Simple Choice plan.

The Wall Street Journal says installment plans aren’t always a better deal, however: “[T]he carriers take in more of your money with these new payment plans, and if you do regularly upgrade your phone, they get to resell your older phone, too.”

Bottom line: Do the math and compare your options before committing.

4. Try a Wi-Fi phone company

Republic Wireless, Freedom Pop and Scratch Wireless offer low prices for Internet-based phone service. Clark Howard’s site describes one:

Republic Wireless is my favorite. For $25 per month you get unlimited talk, text and data. That is the best deal in America. You buy a very good Android called the Moto X for $299 or a decent phone called the Moto G for $149. Then you use the phone like any other, except most of the time you are on Wi-Fi instead of cellular.

How have you lowered your costs for a smartphone and service plan? Tell us below or on Money Talks News’ Facebook page.

Stacy Johnson

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