Guide: How to Choose a Cell Phone Plan

Difficulty: Easy Time Required: 1–2 hours of research and comparison

Most people overpay for cell phone service by $20–40 per month—that's $240–480 per year wasted on data and features they don't use. Choosing the right plan based on your actual usage can cut your phone bill in half while maintaining the same service quality. This guide helps you evaluate your needs, compare carriers, and select a plan that saves money without sacrificing coverage or data.

What You'll Need

Materials:

• Current phone bill showing plan details and usage
• Phone's settings to check data usage history
• Coverage maps from carriers (available online)
• Calculator for comparing monthly costs
• List of locations where you need reliable service

Prerequisites:

• At least 2–3 months of phone usage history
• Knowledge of whether your phone is unlocked or carrier-locked
• Understanding of your typical monthly data, talk, and text usage
• Awareness of family members who might join a family plan

Step-by-Step Instructions

Step 1: Check your actual data usage for the past 3 months

Don't guess—check your actual usage. On iPhone: Settings > Cellular > scroll down to see data used since last reset. On Android: Settings > Network & Internet > Mobile Network > App Data Usage. Check your carrier's app or website for historical monthly usage. Calculate your average. Most people use 2–5GB per month. If you're using less than 3GB consistently, you're likely overpaying for unlimited data.

Step 2: Determine if you need unlimited data

You need unlimited data only if you regularly use 20GB+ monthly or frequently stream video without WiFi. Most people with WiFi at home and work use 2–8GB monthly and don't benefit from unlimited plans. Unlimited plans cost $50–80/month, while limited plans with 5–10GB cost $25–40/month. That's $300–480 per year wasted if you don't actually use unlimited data.

Step 3: Check if your phone is unlocked

Call your current carrier or check online: fully paid-off phones are usually unlocked automatically. Phones financed or purchased on contract are locked to that carrier until paid off. If locked, pay off the remaining balance or finish your contract before switching. Unlocked phones work on any carrier, giving you access to cheaper plans. Most phones from 2018+ work on all major networks once unlocked.

Step 4: Compare major carriers vs. MVNOs for coverage

Major carriers (Verizon, AT&T, T-Mobile) own networks but charge premium prices. MVNOs (Mobile Virtual Network Operators like Mint Mobile, Visible, Cricket, Google Fi) rent network space from major carriers and charge 40–70% less for identical coverage. Check which major carrier has best coverage in your area using coverage maps, then compare MVNO prices using that same network.

Step 5: Research specific plans matching your usage

Based on your data needs, research plans from 3–5 providers. For low usage (under 5GB): Mint Mobile ($15–25/month), Google Fi ($20–35/month), or Visible ($25/month). For unlimited: Visible ($25/month), T-Mobile Essentials ($60/month), or Verizon Start Unlimited ($65/month). Don't just compare advertised prices—check if taxes/fees are included or extra (this adds $5–15/month).

Step 6: Evaluate family plan savings if applicable

Family plans offer major savings. Instead of paying $40/month each for 4 individuals ($160 total), a family plan might be $100–120 for all four ($25–30 per person). Calculate both scenarios. MVNOs like Mint Mobile and Visible offer per-line pricing with small family discounts, while major carriers have tiered family pricing that drops cost per line significantly.

Step 7: Read the fine print on "unlimited" and deprioritization

Unlimited rarely means truly unlimited. Most plans have fine print: deprioritization after 25–50GB (your speeds slow during congestion), video streaming capped at 480p or 720p, hotspot limited to 5–15GB, or Mexico/Canada roaming limits. If you're paying for unlimited, know what you're actually getting. Budget unlimited plans have more restrictions than premium unlimited plans.

Step 8: Calculate total first-year cost including fees and promotions

Don't compare just monthly prices. Calculate the full first-year cost: (monthly cost × 12) + activation fees ($0–35) + taxes (varies by state) – promotional credits or discounts. A $25/month plan with $35 activation is $335/year. A $30/month plan with $0 activation and first month free is $330/year. Factor in switching bonuses some carriers offer ($100–200 gift cards or bill credits).

Common Mistakes to Avoid

• Paying for unlimited when you use 3GB monthly: This is like buying an all-you-can-eat buffet pass when you only eat one plate. Check your actual usage in your phone settings. If you consistently use under 10GB, you don't need unlimited. Switching from $60/month unlimited to $25/month for 5GB saves $420 annually—money that's currently being wasted.

• Staying with a major carrier out of habit: Brand loyalty costs you $30–50 monthly. Cricket (uses AT&T network) costs $35/month for 5GB. AT&T charges $65/month for similar service—same network, same coverage, $360 more per year. People assume cheaper carriers mean worse service, but MVNOs use the exact same towers and coverage as their parent carriers.

• Not considering WiFi usage in data calculations: If you have WiFi at home and work, you're on WiFi 70–80% of the time. Check your phone's data usage breakdown by app. If most data usage shows as WiFi rather than cellular, you need far less cellular data than you think. Many people pay for 20GB+ plans when they use 2GB cellular because they're almost always on WiFi.

• Falling for "free phone" deals with expensive plans: A "free" $800 phone spread over 24 months requires staying on an $80/month plan. That's $1,920 over 2 years. You could buy the phone outright for $800 and use a $25/month plan ($600 over 2 years) for a total of $1,400—saving $520. The "free" phone isn't free; it locks you into an overpriced plan.

• Ignoring international travel needs: If you travel internationally even once per year, factor in international coverage. Google Fi and T-Mobile include free international data in many countries. Other carriers charge $5–10 per day ($50–100 per trip). If you travel internationally quarterly, a plan with free roaming saves $200–400 annually even if the base price is slightly higher.

Pro Tips

• Try a prepaid month first before committing: Most MVNOs offer prepaid monthly service with no contract. Buy one month ($15–30) to test coverage in your actual daily locations—home, work, gym, grocery stores. If coverage is poor, you're only out one month. If it's great, you've found a plan that saves $300–500 annually compared to your current overpriced plan.

• Buy annual plans for maximum savings: Mint Mobile and other MVNOs offer huge discounts for paying annually upfront. A plan that's $25/month becomes $15/month when you pay $180 for the year. That's $120 annual savings (40% discount). Only do this after testing one month to confirm coverage. Annual plans can save $200–300 per year compared to monthly plans.

• Set data usage alerts to avoid overages: In your phone settings, set an alert at 80% of your plan's data limit. This prevents overage charges ($10–15 per GB over) that destroy your budget plan savings. Most plans let you buy additional data cheaply if needed, but alerts help you recognize if you chose too small a plan and should upgrade.

• Use WiFi calling and messaging when possible: Enable WiFi calling in your phone settings. This uses your home/work WiFi for calls instead of cellular network, improving call quality and reducing data usage. Apps like WhatsApp, Facebook Messenger, and iMessage use data or WiFi for messaging instead of SMS, helping you stay within smaller data limits.

• Check employer and membership discounts: Many employers, AAA, AARP, military, student, and veteran status qualify for 10–25% discounts on major carrier plans. These discounts rarely apply to already-cheap MVNOs, but if you prefer major carriers, they can save $10–20 monthly. Check your employer's benefits portal or ask carriers directly about available discounts.

Related Skills

• How to Save Money on Monthly Bills
• How to Create a Monthly Budget
• How to Set Up Auto Bill Pay
• How to Shop for Auto Insurance