Eight questions to ask before you buy your next smartphone

Wireless providers in the United States make it easy to pay more than you should for a smartphone and an accompanying data plan. Here are eight questions you can ask (and answer) to make sure you get the best possible deal.

Last week I added up the true cost of what you pay for an iPhone 6 on a two-year contract. In response, I received a flood of email from readers peppering me with questions on what the best purchase strategy was for them.

Of course, there’s no easy, one-size-fits-all answer for all those questions. But there are certainly some smart things you can do during the shopping process to avoid mistakes and maximize your chances for getting the best possible deal.

For this article, I’ve isolated eight factors you must consider if you want to get the best possible deal on a new smartphone.

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Note that these considerations are fairly U.S.-centric, reflecting the quirks of the mobile market Americans have to struggle with. The buying process is much easier in other parts of the world, where incompatible networks and locked phones are less of a problem.

My goal isn’t to steer you to a cheap smartphone or away from a gadget you’re anxious to acquire. Rather I want to make sure you think about the entire cost of ownership.

For example, the monthly plan you select typically represents the largest part of the purchase price over a period of a year or two. Yet many people gloss over the details of that plan and focus solely on the device cost.

I include details about how I answered these questions, but only as examples, to show you how the decision-making process works. Your decisions are almost certainly going to be different, because your needs and preferences are different from mine.

Ready? Let's get started.

Which network is best for you?

Even if you’ve already made up your mind exactly which shiny object of desire you want, it’s still worth considering whether it’s time to switch networks. Has coverage and data speed for a given network improved enough to make them a contender?

Where I live, AT&T doesn’t offer 4G LTE coverage at all, and there are numerous dead spots, including my office. Verizon, on the other hand, has the area blanketed with high-speed coverage and a strong signal throughout the region.

Checking coverage maps on each carrier’s website is a good starting point, but there’s nothing like personal testing to confirm just how good (or bad) that coverage is.

You can ask friends and associates for their opinions, especially if they live and work in the same areas you do. I use the Speedtest.net app (available on every mobile platform) to confirm that Verizon simply blows away AT&T’s data speed in my home region.

verizon-speedtest-in-progress-small
Using the Speedtest.net app helps you measure performance of your current mobile network.

The screenshot at the right shows the result from a test using Verizon’s 4G LTE in my office, with a relatively weak signal.

When I repeated the test at several locations around the area, including one high spot with unobstructed views of nearby cell towers, AT&T maxed out at under 4 Mbps, while Verizon hit nearly 20 Mbps. Doing this kind of test produces data that can really simplify your decision.

If you travel internationally, you should factor in overseas roaming charges as well. It’s worth noting that T-Mobile offers unlimited free data (at 2G speeds) for its postpaid customers, and with Verizon all phones are unlocked for easy swapping of SIM cards when you travel.

Have you read the fine print?

Don’t listen to a retail salesperson, in a store or on the phone. Take the time to read the details of what you’re signing up for. Read it twice if you have to, carefully, so that you can anticipate any unwanted surprises.

In particular, look for activation fees (which can be waived), monthly bring-your-own-phone discounts (which might disappear if you sign a two-year contract), and early termination fees.

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How much data (individual and shared) do you need?

There’s a natural human tendency to order more than we need. That’s especially true if you’re concerned about being hit with a hefty overage charge or having data access shut down if you run out of month before you run out of megabytes.

But look at your actual usage carefully and you might discover you’re overpaying (or being too parsimonious with using your data). Every carrier has the option to show you historical data usage. Look it up and, if necessary, adjust your plan.

After looking at my historical data usage, for example, I discovered that I wasn’t coming close to using the full 4 GB of data I was paying for every month, so I trimmed my family’s Verizon plan to 2 GB of shared data usage.

monthly-data-usage
Check your historical data usage to make sure you're not overpaying for data each month.

That one step was worth $20 a month, or nearly $500 over the course of a two-year contract.

Have you considered a prepaid plan?

If you even think of prepaid services, you probably think of starving students and overseas workers, who are indeed a prime market for prepaid plans, which require no credit check or contract.

But the end product, while cheaper, is often identical in features and uses the same network as postpaid plans. Every major carrier has its own prepaid plans, which can be set up for automatic payments or paid each month online or by buying a code.

At T-Mobile, for example, you can pay $30 for a plan that lets you talk for up to 100 minutes, with unlimited texts and up to 5 GB of data at 4G LTE speeds. (Update: T-Mobile's website implies that this plan is not LTE, but a reader confirms you get full LTE speeds.) The least expensive monthly plan with unlimited talk and text and LTE coverage is $45 a month for 2 GB of data.

Verizon’s Allset prepaid plans for smartphones start at $45 with 500 MB of data for a month, with options to buy “bridge packs” of data good for up to three months. And yes, you can bring a paid-for high-end device like an iPhone to that bargain plan.

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There are also deals from mobile virtual network operators (MVNOs), which resell wireless service from major networks like AT&T and T-Mobile. You can bring your own phone to Net10 Wireless, for example, which you might recognize by its old name, Tracfone. Or make a political statement about pot laws by choosing 420 Wireless. You’ll find a long list of U.S.-based MVNOs at Wikipedia.

How long do you want to keep the device?

Apple releases at least one new phone every fall. Other phone makers are also continually releasing new models that might strike your fancy. If you start to get antsy before your latest smartphone’s one-year anniversary, you need to treat two-year contracts as if they were radioactive.

The killer with those contracts is the Early Termination Fee, which you looked up when you read the fine print, right?

I own one phone whose Verizon contract is up in just a little over nine months. If I surrendered to impatience today and tried to sign a new two-year contract to replace that phone, I would pay $210 for the privilege. If I try to skip even one month, upgrading in month 23 instead of waiting until the very end, the ETF is $120. Ouch.

If you want to calculate your own ETF, use the MyRatePlan online calculator.

As I noted last week, three of the four major U.S. carriers now offer plans that allow you to finance a phone at its full retail price, divided into 20 or 24 monthly payments, and then upgrade without an ETF. If you absolutely must have a new smartphone every year and you can’t afford to pay full price for it, this is the way to go.

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Have you considered a used or refurbished smartphone?

You know that phone you just returned after trying it for less than two weeks? There was nothing wrong with it, right? It is physically literally as good as new, but the dealer who sold it to you is not allowed to resell it as new.

That can mean a very good deal for you if you can find a refurbished device that matches your choice. The discount from a new device can be substantial, especially for a device that was introduced up to a year earlier.

Here are a couple examples I just looked up:

  • AT&T charges $510 for an iPhone 5S with 32 GB but asks $600 for the same model when new.
  • T-Mobile charges $492 for a refurbished HTC One M8, a savings of $93 off its already-discounted price for new stock of that flagship Android phone.
  • Verizon has the Samsung Galaxy S4 for $350, refurbished. That’s $150 less than the same device, new in the box.

If you’re willing to shop online you can find even better deals from private sellers, especially those who have just exchanged a defective or damaged phone for a refurbished one and put the “just like new, still in the sealed box” unit up for sale.

And you can get even better deals if you’re willing to brave the used market. Gazelle, for example, has built a brisk business buying phones for cash and then reselling them on eBay. For a phone that’s less than a year old and still available new from the carrier, you can save hundreds of dollars. And you’re not locked into a contract or monthly financing.

gazelle sells phones
Gazelle is one of several services that buys and resells used smartphones.

Are you prepared to return a device if it doesn’t work for you?

Reviews and in-store test drives only go so far.

If you’ve read this far, then a smartphone is probably a constant companion for you. You need at least a week just to settle in properly with a new device, learning its features and discovering its strengths and weaknesses. You need perhaps another week to see whether it can handle what you throw at it.

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A hands-on test is the best way to assess the quality and strength of a mobile network’s coverage at your home, at the office, and in your neighborhood.

A device that gets raves from reviewers might leave you cold after you’ve spent some time with it. That happened to me recently with the HTC One M8 (Windows), which I tried out and returned because I prefer the Lumia Icon.

Each of the four major carriers has its own return policy and restocking fees.

Verizon, AT&T Wireless, and Sprint have similar return policies, allowing a full refund or exchange within 14 days of the purchase date, with a possible restocking fee of $35. T-Mobile offers a similar 14-day exchange window for devices purchased at a retail store, with extra time (20 days from the date of receipt) for any device you buy at the online store. The restocking fee is higher, at $50.

Have you done the math?

It’s tempting to just click the Buy button regardless of the consequences. That’s especially true for highly anticipated launches like the iPhone 6, where those who hesitate even a few hours could find themselves waiting for weeks.

But doing the math for a new agreement—adding up the down payment, activation fees, and monthly charges for the term of the agreement—lets you see the true cost of ownership at a glance. Those numbers can be pretty sobering, maybe enough so to force you to stop for a moment and maybe decide to wait a few more months.

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