5 Things You Should Know About T-Mobile’s New No-Contract Plans

T-Mobile has made a bold step by getting rid of two-year contracts. Here's the skinny.

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T-Mobile has made a bold step by getting rid of two-year contracts. It’s actually not quite that simple – especially if you want an inexpensive phone – but there are savings to be found nonetheless. Here’s the skinny.

The plans are affordable, considering what you get. Fifty bucks a month will get you unlimited minutes, unlimited text messages and 500 megabytes of data. Ten bucks more gets you an additional two gigabytes of data; ten bucks more than that gets you unlimited data. Family plans start at $80 per month for two phones and top out at $210 per month for five lines and unlimited data.

All plans include unlimited text messages and the ability to use your phone as a data hotspot for your other devices, which are nice perks. Such features can cost extra on competing networks.

There are no data overages, but there’s a catch. Let’s say you opt for the $50-per-month plan to try to save some money, but you blow through your 500-megabyte data allotment. You won’t be charged extra and your data won’t be turned off, but it will be slowed down to almost unusable speeds. Remember dial-up? How slow everything was? We’re talking speeds close to dial-up.

Of course, connecting your phone to your home or office Wi-Fi connection will keep your data speeds nice and fast. Only the data connection to T-Mobile gets slowed down; you should connect your phone to Wi-Fi whenever possible as a general rule of thumb, since it doesn’t use your T-Mobile data allotment.

There are no two-year contracts, but there’s a catch. Your smartphone that cost you $200? It actually costs a lot more than that, but you paid $200 for it in exchange for a two-year contract with Verizon or AT&T or Sprint or whichever company you’re with. So how can T-Mobile continue to offer cheap phones when there are no two-year contracts anymore?

One way is by letting you pay full-price for a phone. Samsung’s Galaxy Note II costs $680 that way. That’s the most expensive one; some are far cheaper. The other option is to get the phone at a discount, but pay up to $20 per month for two years as an equipment fee. In this scenario, the Galaxy Note II costs $200, plus $20 per month for two years.

So that $50-per-month personal plan all of a sudden costs $70 per month and you’ve agreed to a two-year contract of sorts.

You can use the iPhone, but there’s a catch. AT&T and T-Mobile use similar cellular technology, making it possible to use AT&T phones on the T-Mobile network and vice versa. If you pay full price for a T-Mobile phone (as in the previous scenario) and you decide you don’t like T-Mobile, you can jump ship and use it on AT&T.

Likewise, if you have an AT&T phone, such as the iPhone, and you’ve paid full price for it or fulfilled your two-year contract with AT&T, you can use it on the T-Mobile network instead. This quip from the fine print on T-Mobile’s Bring Your Own Device page is important, however:

T-Mobile does not sell the iPhone. Verizon and Sprint iPhones will not work on our network; other iPhones may have limited functionality, including coverage limitations. Capable device required for 4G speeds; the iPhone is not currently 4G capable on our network.

T-Mobile uses a different flavor of 4G data than AT&T uses for the iPhone, so your 4G LTE iPhone 5 would download apps and surf the web considerably slower. T-Mobile is readying its own 4G LTE network, however, so the word “currently” in that above quip might very well mean something someday.

UPDATE: T-Mobile will begin selling the iPhone directly on April 12

Run the numbers to see if paying full price for a phone makes sense. Using the $680 Samsung Galaxy Note II as an example, over the course of two years on the $50-per-month plan, you’d spend $1,880. If you were to pay $200 for the phone, plus $20 in equipment fees for two years, the total cost with the $50-per-month plan would also be $1,880.

If you’re the type of person who uses a phone for at least two years before buying a new one, the installment plan could make sense here. If you don’t like two-year contracts or you want to upgrade to a new phone every year (sell the old one on eBay or Craigslist or use one of the many trade-in sites), paying full-price up-front could make sense. It’ll make your monthly costs cheaper, too.

MORE: How to Be a Frequent Smartphone Switcher

15 comments
fawmeopfw
fawmeopfw

"One way is by letting you pay full-price for a phone. Samsung’s Galaxy Note II costs $680 that way. That’s the most expensive one; some are far cheaper. The other option is to get the phone at a discount, but pay up to $20 per month for two years as an equipment fee. In this scenario, the Galaxy Note II costs $200, plus $20 per month for two years."

That's not a discount, dummy. You're paying the same price over a period of time. They act like their new business model is better for customers but it only hurts us with much higher phone costs. The monthly plan cost is about the same as before.

nooneimportant2
nooneimportant2

Its a little misleading that you gloss over the fact that (20 * 24) + 200 = 680 which is the full price of the galaxy note 2, with no interest added. You don't point out that, when you compare the contract monthly price to the no-contract price of other carriers, the full price of the subsidized phone is a lot more than the retail price. This is important information when assessing whether the new T-Mobile plans are a good value. Also, you don't mention the Jump plan that lets you trade your old phone in for a new one after 6 months.

light24bulbs
light24bulbs

Pretty sure t-mo and att use totally different technologies and are NOT backwards compatible 

Manbot
Manbot

$50 TM refill for $40 on netstrada !

TMobileUser
TMobileUser

Your note on verizon iphone5 is old news. Check latest in their FAQ

Verizon and Sprint iPhone 5 devices are compatible with our network. Previous iPhone models from Verizon and Sprint are not compatible with T-Mobile's network. 

Reference: http://explore.t-mobile.com/phone-sim-card#faq

onevoicemobile
onevoicemobile

Not a bad plan but you can do better at www.onevoicemobile.com where you pay just $50 a month for unlimited talk, text, web without getting throttled after 500 megabytes. 

Here is a really good review of the Nexus 4 on our network from One Voice Mobile:http://www.youtube.com/watch?v=C9hT-DItJmA&feature=plcp We have the best no contract mobile phone plans.


ksixrenine
ksixrenine

@Techland: T-Mobile gets rid of two-year phone contracts: Here are five things you should know | ti.me\/102diKGcq3” 이년약정을 없애다니 ㄷ ㄷ ㄷ