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Contracts are not new to the cell phone market, but in the late 1990's many of the service providers allowed people to buy inexpensive cell phones without contracts due to the fierce competition within the North American cell phone market. Now that the market has almost reached saturation, many of these service providers are returning to signed contracts to ensure that their customers remain with them for several months.

Contract Advantages:

Your monthly rate will not increase over the contract period, provided that you stay on the same rate plan
The phone purchase may be reduced by $50-$150 or more over not signing a contract
You might receive a billing credit a few months into the contract
A network setup charge may not apply ($25-$50)
You might receive bonuses, such as free incoming minutes, caller ID, or voice mail

Contract Disadvantages:
Phone purchase price likely is higher
There might be a setup charge
You are restricted in your monthly plan for the contract duration (rate increases are permitted, but not decreases)
If you lose or want a new phone, you purchase that phone at the full, non-contract price, if you are still on a contract
If you break the contract then there is a penalty, often the price of the remaining months on the contract
Contracts often require a minimum monthly fee, which might be more minutes or features than you might use

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by elusion See Profile