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Contract vs. no-contract phones

There’s no shortage of options when it comes to cell phones and plans. But when it comes to contract cell phones versus no-contract phones, what’s the best option? Before you decide to ditch your contract for the freedom of pre-paid, be sure to weigh your options and do your homework. Here’s a primer on cell phone plan types to help get you started.

Contract cell phones

How they work: You choose your carrier and are billed for monthly service (typically a flat fee plus additional charges, including taxes, fees and applicable late penalties). You’ll need to sign a contract — typically for two years — with steep penalties for early termination.

The benefits:

  • Free phone: Every two years (in most cases, you're eligible for an upgrade when your contract expires, as long you re-sign)
  • Insurance and replacement plans: Access to cell phone insurance or replacement plans in case you lose or damage your cell phone
  • Bundled services: Potential opportunity for convenient bundled services, such as broadband, streaming media and landline phone service
  • Number portability: You can keep your cell phone number, even if you opt to switch carriers and sign a new contract after two years
  • Latest phones: Cell phone carriers like AT&T, Sprint, Verizon and T-Mobile offer a broad assortment of popular cell phones and smartphones — from the latest iPhones and Androids to basic calls-only models
  • Fast networks: Access to 3G, 4G or 4GLTE coverage unlimited data plans (availability varies by market and carrier)
  • Family plans: Additional lines for friends and family

Check out our wide assortment of cell phones by carrier.

No-contract cell phones

How they work: With pay-as-you-go or prepaid cell phones, you pay in advance for service and don't commit to a two-year contract. No-contract cell phones make sense for many people — whether your main goal is stretching your dollar or keeping your options open. Today's no-contract cell phone carriers offer more options than ever, making it easy to customize your perfect plan to include just the right mix of talking, text messaging and data usage.

The benefits:

  • Versatility: Not tied to a particular carrier or phone just because you signed a two-year contract
  • Easy-to-understand plans: Depending on the carrier network, your options include monthly unlimited calling or pay-as-you go plans, typically depending on the phone you purchase
  • No surprises: Pay-as-you-go with prepaid service, to get the benefits of wireless, minus the surprises — no long-term contracts, credit checks or deposits — and quick and easy to minutes refill via prepaid cards, online fulfillment or a monthly flat fee
  • Low monthly fees: Monthly unlimited plans include unlimited talk, text, Web, email and 411 for a low monthly fee (varies by plan and carrier)
  • Better control over your finances: No more overage fees, credit checks or unwieldy monthly bills
  • Variety of cell phones: Many no-contract cell phones and plans offer the next generation of wireless technology, 4G or 4GLTE. Lightning-fast Web browsing and streaming means your text-happy teens, social media mavens and multimedia aficionados are happy
  • International call plans: Select carriers offer competitive international rates, making it more affordable to connect with friends in families across the globe

With so many cell phone models and cell phone plans available, refer to this handy comparison and choose the plan that works best for your needs and your budget.

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