Are Longer Cellphone Installment Plans Worth It?

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A sometimes-bewildering array of choices faces cellphone buyers. Here’s help with your decision.

First, a little background: Cellphone installment (or finance) plans typically run 24 months. However, some carriers are offering shorter or longer installment periods. T-Mobile, for example, now offers installment plans over 36 months, which drops your monthly payment lower. So, which are better for you — the longer installment plans or shorter ones?

Benefit of longer installment plans

The main (and maybe the only) benefit of choosing a longer installment plan like T-Mobile’s 36-month installment compared with a shorter plan, like Verizon’s 24-month installment plan, is that your monthly payments will be slightly lower with the shorter plan. The total cost of the cellphone itself should be about the same, whether you’re on a 24-month, 30-month or even 36-month plan.

Longer handset payment plans are best for those who want to pay a lower monthly price.

Downsides of longer installment plans

The main downside of signing up for a longer installment plan is that you’re stuck with both the carrier and phone for longer. If you’re new to the carrier, will you like the service? Committing for three years can be a little risky. A longer installment plan also means you won’t be able to switch carriers for a while (unless you pay off the full remaining balance).

Why would you switch carriers, anyway? Well, switching carriers may save you a ton of money on your plan and/or phone.

Longer installment plans also take longer to pay off the phone and own it outright. Before you’ve paid it off, many newer models will be released and your phone is yesterday’s news. One way to get around this: Sign up for the carrier’s early upgrade plan, so you can upgrade the phone before you’re done paying it off.

Which installment plan should you choose?

There’s no easy answer. Your choice depends on several factors:

  • If you want lower monthly bills. If lowering your monthly cellphone bill is your biggest concern, go for a longer installment plan. Options: T-Mobile offers 36-month installment plans for select devices, while AT&T offers 30-month installment plans.
  • If you want more-frequent upgrades. If you don’t mind paying a bit more each month to get a new phone more often, you’ll like a 24-month installment plan. Options: AT&T, Verizon and T-Mobile (on select phones only) offer 24-month installment plans.
  • If you want a new iPhone or Samsung Galaxy phone with each new release. Consider leasing a phone from Sprint if the having the latest issue is your thing. With Sprint’s 18-month Flex Lease plan, upgrades are allowed after 12 months on the plan. Your monthly cost (for full price) runs about the same as if you were buying with a 24-month installment plan. But the carrier often offers great deals on Flex Lease plans. These plans are great for those who always want the latest and greatest phones and don’t care about actually owning the device.

To learn more, check out these plans:

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