Budget phone plans seem to be popping up everywhere, promising customers everything they would need from a phone company for just a fraction of the price.
Nicholas De Leon from Consumer Reports explains that this works by companies basically renting wireless capacity from bigger phone providers like T-Mobile, Verizon, and AT&T.
"Because... these providers don't have huge marketing budgets, they don't have stores, and they don't have as much, you know, overhead as the three big guys, they can offer consumers lower prices," said De Leon.
He says the biggest thing to think about before making the switch is how you use your phone every day.
"Are you someone who is streaming YouTube all day? Are you playing video games? Are you using these, sort of, like, high-bandwidth applications? That's one type of consumer. If you're the type of consumer who's, you know, maybe you text your wife, maybe you make phone calls, maybe you just check the occasional email, you're not really doing much. That's sort of the other end of the spectrum," said De Leon.
Those types of customers could see an impact.
"A lot of these lower-cost providers...while they do offer unlimited data plans, they do frequently reserve the right to, it's called, 'throttle' your data," said De Leon.
"Bandwidth throttling" is when a phone provider limits the speed at which customers are receiving or sending data.
"They'll set a limit. It's like, okay, you're allowed to download...20 gigabytes of high-speed data per month, but anything after that, we reserve the right to kind of slow you down," De Leon added.
If you think this could work for you and your lifestyle, you could always try one of these phone plans before signing a long-term contract.
"Some of these smaller providers do offer a way to kind of, like, test drive them. You know, a free trial for a month or a couple of weeks to kind of see if they fit into your life and whether or not they meet your needs," said De Leon.
Some final tips and things to know:
- Make sure you look at your phone plan contract when you sign up, because after a year that low monthly price could jump to a much higher amount.
- Always watch out for extra fees.
- Finally, most of these companies do not make people buy a new phone when they switch providers.