I was paying for a new mobile phone for more than a year after the two-year contract expired on my first personal smart phone, but still was using my original phone. At the time I thought I was saving the cost of a new phone and spreading out the useful life of my existing smartphone to more than three years. What I didn’t realize was that after the contract expired, I was paying for a new smartphone with the latest tech, but not getting to use it.
How I paid for my phone without credit cards
For several years, wireless carriers offered phones free or at reduced up-front cost to attract us to a commitment—often for two years. They did this by subsidizing, or spreading the cost of the phone over a period of time under contract. If they had established that you pay something up front to get started, that is deducted from the phone’s cost before calculating the payment. If you wanted to escape from the contact early, they charged you the amount that you had not yet paid toward the phone.
The subsidy payment toward the phone for each month of the contract period is then added to the monthly cost of service. The total of both comprise the monthly payment for the contract period.
Why I paid for most of a new phone but didn’t get it
Since the carriers calculated payments by taking their cost for the phone and dividing it by the number of payments they have you tied into the contract for, any payments after the contract is satisfied provide icing for their cake.
There is no provision in the contracts for monthly payments to the carriers to go down once the phone is paid for. Therefore, the portion of my monthly payment that was going to pay off a new mobile phone was not being used toward that anymore and became extra profit for the carrier.
If I had run out to get a new phone after the contract expired, my payments may have been nearly the same, or perhaps a little more, but, I would have enjoyed the new tech for more than a year at about the same cost as I was paying while using my older tech.
Are the carriers make the bonus bucks on you?
When I figured out how the carriers duped me by not dropping the monthly payment when my contract was satisfied (the phone was payed off), I quickly went out and got the latest phone that I had been eyeballing for some time. My payment actually barely changed, although I was in another 2-year contract, but I had the latest phone and enjoyed the newest features and functions.
As soon as that contract ran out, I was back at it, picking my new favorite mobile phone. This time though, I opted for a no-contract cell phone with the option to simply make payments until it was payed off. The monthly service fees are now separate. When my phone is payed off, I can choose to let my overall cost for mobile service drop because I no longer have a device payment. I no longer let the carrier collect extra profits for a device they have already been paid for.
How about you? Are you out of your contract? Are you still paying the same monthly fee that your contract stipulated when you first got your phone? If so, you may be enriching the bottom line of your carrier and not know it or have a way out unless you get a new device and restructure the deal you accept from your carrier. You may even be able to get an unlocked cell phone and add it to your plan. In any case, stop paying on an expired contract and upgrade your mobile phone so you get all that you are paying for.