Saving Money With Verizon’s New Plans

My wife and I use Verizon cell phones under a legacy plan from a former employer. We’re very happy with what we pay, and what we get. Call us old-fashioned, but we’d rather call someone than text them, and any photo op we have we can handle by waiting until we have a camera. The feel of a keypad is comforting and reassuring; the smooth face of the smart phones is not a security blanket for us.

So it was with some excitement that I saw the news story about Verizon making changes in its pricing plans. Hoping that we might be able to save a little each month (and who is not doing that?) I phoned their Customer Service Department. Then, to confirm what I’d been told, I went to David Goldman’s column on money.cnn.com. Here’s what I found out:

“Verizon’s new no-contract smartphone plans are a good deal no matter how you slice them,” he advises, “but there are ways to maximize the bang for your buck.”

The Basics of the New Verizon Plans

Here are the basics of the story: Verizon discontinued contracts for new and current customers buying a new phone effective August 13. Available packages have slimmed down to four plans. These data package range from small (1 GB of data per month), medium (3 GB), large (6 GB) and extra-large (12 GB).

Saving Money With Verizon's New Plans
Saving Money With Verizon’s New Plans

You can open one of these plans with no down payment and no activation fees. They’ve eliminated two-year contracts for service. If the reason you need a new plan is you want to buy a new phone, then you’ll either pay the total price of the phone up front, or roll it over into a two-year payment plan, on top of your service fee. Gone is the major incentive of a discounted price for the phone.

Seems they were getting bitten by folks who bought phones with the price reduction then turned around and re-sold them for a price still less than the market value. They then paid off the phone and switched carriers. This didn’t make the folks in New York very happy (FYI, we began our relationship with this company back when it was PacTel Communications out of California. We’ve been loyal to them through all their mergers and acquisitions, and likely will stay with them until the cell towers crumble).

Staying Put Could Be Your Best Strategy

But I digress. You want to know the best ways to save the most money with Verizon’s new plans. The smartest scenario is to keep your existing phone and buy a big data package.

Say what?

I’ll untangle that for you. Your two-year contract on the Samsung Galaxy S4 expires in a month. The records say you’ve been using 12 GB of data per month and that plus service costs you $140 a month. The savings are going to come in the data package. The new plan will bill you just $100 a month.

Here’s the “it’s hard to believe” part. If you think you’ll save money by purchasing less data, you’re wrong. If you’ve been using 6 GB a month in data, you could save $30 a month or $110. Using 3 GB of data would save you $25 a month ($115 a month) and using 1 GB would save you $20 ($120 a month for service and data).

They explain it this way on their website:

PLAN BEST USED FORDATA FREQUENCYPERSONAL USAGE
S 1 GB / $30Light web browsingOn and off emailFacebook once in a while
M 3 GB / $45One userStreaming music Online all the time
L 6 GB / $60Gamers Video streamingSharing data with someone
XL 12 GB / $80FamiliesSmall businessesBig-time data users

All sizes include unlimited talk and text. Plan cost per month plus $20/month for each smartphone line. Taxes and fees apply. For us, if we just kept our old flip phones and added data, it would be $80 and the junk fees. That wouldn’t save us any money. You can place yourself in that grid and get an idea of which package you need.

If you are already a no-contract customer they already had a no-contract plan formerly known as Edge. You could save money buying phones up front or paying them off over the course of two years. If you’re an Edge customer, you’ll likely want to switch to Verizon’s new plans too, since they are cheaper than Edge — just far less-dramatically so.

For new or existing customers, if you are thinking of buying a new phone, you have two options.

The first choice is to buy your phone straight-out, paying for the full cost of the phone upfront. At the beginning, you’ll pay more on these new plans than on a two-year contract. But you’ll save money each month (see “best scenario”) and you’ll also save money over the course of two years. It’s the amortization of the equipment that is the benefit.

Or you could pay your phone off over two years. With smaller data plans, you could actually pay slightly more every month for two years. Still, the old two-year contracts made you pay a $200 down payment and a $40 activation fee. The new plans waive both of those charges. The new Verizon plans could be cheaper in the long run.

Crunching the Numbers on the New Plans

Check out these figures from Mr. Goldman:

You use 1 GB of data a month, and select a 16 GB iPhone 6S. They’ll charge you $77 a month over the next two years. (You would have been billed $70 under the old plan.) But taking into consideration the lack of an activation fee and down payment, the 1 GB plan will end up saving you $72 over the course of two years ($1848 vs. $1920). That’s an average savings of $3 a month.

You’ll be billed $2 a month more for a 3 GB plan for a new iPhone. Take away the cost of the activation and down payment fees, you’ll save $192 over two years ($2208 vs. $2400). That’s an average of $8 a month.

A 6 GB plan will save you $3 a month on your monthly bill. Taking into consideration the upfront fees, you’ll save a total of $313 over two years ($2568 vs. $2880). That’s an average of $13 a month.

And a 12 GB a month plan will save you $13 a month on your bill. Without the initial charges you’ll save $550 ($3050 vs. $3600) over two years, for an average savings of $23 a month.

Sounds like “smoke and mirrors” to me, so I would advise you to talk personally with a representative to be sure the figures are accurate. But this is introducing clarity to what was a somewhat cloudy process. Now you know how much you are paying for your phone and can know in advance if you are being blind-sided. With Verizon’s new plans, you’ll know exactly what you’re paying for. And you’ll definitely be saving something — potentially a lot, if you play your cards right.

Are you satisfied with your cell phone package? Is a data package that significant to you? Does it seem to be getting more complicated to compare packages between carriers these days with all the options available?

( Photo by JeepersMedia )

5 Responses to Saving Money With Verizon’s New Plans

  1. Wouldn’t you know it? This piece gets published and two days before (as of last Saturday, 10/10) Verizon ups the ante on their data charges by $20? Re-calculate everything in the article with that increase in mind.

  2. Thanks for the update Bill. Have you noticed that it’s becoming impossible to lock in anything anymore? Everything is subject to change. You’re almost reluctant to quote anything for fear that it’ll change a few days later!

  3. You can get this same set up with AT&T also especially if you buy phone upfront. Take getting a new iPhone,you can buy it directly from Apple unlocked and can go to any carrier to get your phone service with data plan which also includes text,etc. Especially with iPhones you need to get any warranties from Apple. I am using this example to emphasis the point that if you already have the phone you want to use, you can chose the data plan (just make sure you know how much you use on an average basis). I had someone tweet me about cost over the year is higher if you do get a little extra GB. I am on a shared plan with 2 IPhone users and we have the 15 GB plan ( I have the android Samsung phone). We never have overage or slowing of data usage. Cost has gone down since the 2 IPhones were purchased directly from Apple in full.My point is have your phone in hand before you chose a phone plan and know your usage. Remember the cheaper the plan the less you get all round in use of phone.

  4. Good points Maria! There are actually two separate financial arrangements in all cell phone plans – the phone and the plan itself. By buying the phone direct, you strip the plan down to what it really costs. I think we don’t do this because in the past cell phone providers have convinced us that the two are inseparable, and because of the convenience of taking care of the purchase of the phone, and the plan at the same time.

  5. Guess folks are just going to have to stay vigilant whenever they get a phone to keep from having sticker shock or “first bill surprise.!”

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