Easy Way to Save Hundreds a Year: Keep Your Old Smartphone

Smiling men and women text messaging on cell phones in a row
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Do you have an older smartphone that still works? Will you soon be eligible for a new phone but see little reason to upgrade? Although newer smartphones may be larger, run faster and offer longer-lasting batteries, many consumers are content with their current handsets -- and they should be.

Within the last few months, major carriers, including AT&T (T) and Verizon (VZ), have unveiled plans that allow subscribers with older handsets to save a fair amount of cash.

Abolishing the Two-Year Treadmill

Until recently, two-year handset upgrade cycles were the norm for the major carriers. Wireless subscribers would sign a contract, get a new smartphone and after two years be eligible for a new-phone upgrade. At that point, the subscriber would sign a new contract, get a new phone, and the cycle would repeat in perpetuity.

Of course, if they really wanted to, AT&T and Verizon subscribers could hold onto their old smartphones and refuse to sign a new contract. Choosing this option didn't make much sense because even after a wireless contract had run its course, the monthly bill remained the same. In that respect, not taking advantage of an upgrade was a bit like leaving free money on the table -- AT&T and Verizon were willing to pay for most (or all) of the new phone's cost, so why not take them up on the offer?

But things have changed. In December, AT&T announced an alternative policy that allows subscribers with paid-for handsets to save money. Verizon followed in April, announcing that subscribers whose contracts had run their course could receive a monthly discount on their bill.

How to Take Advantage of These News Plans

To take advantage of these savings, subscribers with AT&T and Verizon will need to be on the correct plans -- for Verizon, More Everything; for AT&T, the Mobile Share Value plan. Switching may entail giving up unlimited data plans or other valuable arrangements. But many subscribers who signed a two-year contract within the last few years should see a benefit.

On these plans, you can rack up significant monthly savings by using an old handset. Verizon subscribers can save $10 to $25 per phone per month depending on how much data they use; for AT&T subscribers, the savings is $15 to $25 per phone.

Recent advertisements from both companies have trumpeted the potential savings -- a popular deal promises 10GB of data on four phones for $160 per month. To get that price, however, subscribers will need handsets that are already paid for -- purchasing new phones on two-year contracts will cancel out the monthly savings, and financing new phones using monthly installment plans (AT&T's Next and Verizon's Edge) will bring additional costs.

Decisions, Decisions

Holding on to an old phone isn't for everyone. Gadget enthusiasts obsessed with the latest tech may scoff at the prospect, and subscribers with damaged, malfunctioning or sluggish handsets may be counting down the days until their contracts expire.

In the past, upgrading every two years was a forgone conclusion. With these recent pricing policy changes, it's not a simple slam-dunk decision. Given the hundreds of dollars in potential savings, it's a welcome dilemma.

Motley Fool contributor Sam Mattera has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of Motley Fool newsletter service free for 30 days.

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Antsy Kuhnwisse

I love my cheap flip phone and my cheap Boost service. Since I didn't upgrade, I'm get to keep their $35/month unlimited text & talk plan (started at $55 five years ago, but decreased due to their "shrinkage" feature, and should stay at $35 as long as I don't upgrade).

Too late for y'all to get in on that deal, though; they've discontinued the "shrinkage" feature.

December 03 2014 at 3:14 PM Report abuse rate up rate down Reply
Jessica Prah

Another easy way to save money on cellphone service is to choose a no contract provider such as GIV Mobile. GIV Mobile offers customers “Unlimited Everything” plans for as little as $40/month that utilize the 4G network of T-Mobile. Not only is GIV Mobile affordable, but it is the first consumer conscious wireless service plan dedicated to donating 8% of a customer’s monthly bill to up to three charities of their choice. The choice of charities include the American Red Cross, Ronald McDonald House Charities, American Cancer Society and many more.

July 24 2014 at 5:53 PM Report abuse rate up rate down Reply

My $10.44 phone with a $45 monthly "all you can talk and text" plan works perfectly!

July 22 2014 at 1:36 PM Report abuse rate up rate down Reply

I would never open a business in this age of smart phones. I was in Walmart tonight and came around the corner to find a employee playing with their telephone. They instantly tried to hide it by putting it in their pocket. I was at a carnival last month where 4 cops were being paid to do security.. I could have sold a pound of cocaine 10 feet from them and they wouldn't have seen it because they were playing with their telephones. Everywhere I turn people are on the clock screwing around with their telephones. Not just checking the time, either... Playing with the stupid things. I told my wife to put on her resume that she doesn't have a smart phone to play with and that alone will make her twice as productive as everyone else.

July 10 2014 at 2:54 AM Report abuse +2 rate up rate down Reply

I saved $400K last week. I went to a Ferarri dealer and didn't buy anything.

July 10 2014 at 1:25 AM Report abuse +1 rate up rate down Reply

People are slowly (very slowly) learning what rip-offs these cellular service companies are. (What other business has the gall to DEMAND two-year contracts from customers???)

"Smart phone". What a sick joke on consumers. Just say NO to this legalized scam and choose a pre-paid phone, instead. Then, tell Verizon and AT&T to stuff their apps where the sun doesn't shine. LOL

July 09 2014 at 7:06 PM Report abuse +1 rate up rate down Reply
2 replies to Valerie's comment

Go back to your rotary dial phone

July 09 2014 at 9:43 PM Report abuse -1 rate up rate down Reply
2 replies to grgblnk1's comment

Right after you tell us how great it is to be living in your Mom's basement and eating ramen noodles. LOL

July 09 2014 at 10:29 PM Report abuse rate up rate down

Valerie, just quit while you're behind.

Go buy a Jitterbug. That's the cool phone for all the fossils.

July 09 2014 at 10:45 PM Report abuse rate up rate down

I am with Valerie... I use a tracfone for road emergencies and have a home phone through the cable company.. I won't pay for the home phone for 2 years because it came free with a deal. I wouldn't have the tracfone, but payphones aren't on every corner like they used to be. In the state I live in, there are $15 in monthly taxes for a cell phone, in addition to the monthly subscription of around $40. These cell phones are turning people into anti-social robots. I went to a bar the other day and every person at the bar was staring into their telephones.. about 7 people in all. I guess I am a dinosaur, but I like the old days before cell phones were such a distraction.

July 10 2014 at 2:59 AM Report abuse rate up rate down Reply

All of these companies are predators. I have had Verizon Fios for about 3 years and can't wait to dump them. They lowered my bill last year if I went with a two-year contract on my bundle package. Of course, I gave up some channels. When the promo expired, boy, did my bill go up! I am now paying more than I was before I changed course and with less channels and less speed on the computer!

July 09 2014 at 3:33 PM Report abuse +4 rate up rate down Reply
1 reply to chaparita0728's comment

And you blame them for that?????

July 09 2014 at 9:43 PM Report abuse -2 rate up rate down Reply