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Want a lower monthly mobile phone bill? Opt for a no-contract plan

It's a no-brainer.

Since coming to America in 2014, I've used a StraightTalk no-contract plan for my cellphone service. It's a $45-a-month deal that gives me unlimited talk and text, and up to to 10GB data every month at 4G LTE speeds.

When I received a new phone for Christmas, I needed to find a micro SIM card – the Subscriber Identity Module that holds my plan info – of a different size.

As I was perusing the aisles at Walmart, the StraightTalk retailer, I noticed another deal from Total Wireless, offering 5GB data per month and unlimited talk/text for $35 a month.

Seeing as I rarely use more than 2GB of data in a month, I quickly switched over and am now saving $120 a year.

The case for non-contract cellphones

Both Total Wireless and StraightTalk use the Verizon mobile network, so I'm assured of great coverage. Yet their plans cost so much less than the $75 a month Verizon charges for a single-line, 2-year contract (albeit for unlimited data which, as I said, I don't need).

What's more, it's month-to-month, so I can cancel whenever I want and pick a new provider if I'm not happy. I won't have to pay any early exit fees either.

Contracts still dominate the cellphone market because they allow people to get the latest phones for less. Carriers subsidize the upfront cost of buying a new cellphone and make the money back by locking you into a more-expensive 2-year plan that carries early exit fees.

It's easy to see why these are popular when a new iPhone X costs $1,000. You could get your hands on one for $279.99 upfront from T-Mobile today, with the rest paid in interest-free monthly payments when you sign up to a cellphone plan ($70 for one line).

However, no-contract plans allow you to bring your own phone. So if you do want a new phone, you can buy it yourself and then sign up for a non-contract plan. 

Note:Be sure to check that the phone is unlocked, and/or compatible with the plan you want before you buy.

Yes, I know, buying the handsets new is expensive. So I suggest you save up first and delay gratification, rather than being locked into a contract that costs more over the next two years.

To save even more, buy a refurbished or second-hand phone, which comes with risks but is significantly cheaper than buying new.

That's not to say contract phones are all bad. Family plans in particular work out cheaper. Verizon, for example, offers 4 lines with unlimited data/talk/text for $160 for 4 lines.

At $40 per line, that's comparable to most cheap no-contract deals buying individually, but with unlimited data, makes it much more valuable.

Nonetheless if you're buying on your own, no-contracts are a no-brainer.

The best no-contract plans

Here's a look at the best non-contract plans on the market right now:

Best if you want data, but don't use too much

Walmart Family Mobile:T-Mobile network, 3GB data at 4G LTE (2G speed thereafter), unlimited talk & text, costing $29.88 a month.

Best all-around

Total Wireless:Verizon network, 5GB data at 4G LTE ($10 for another 5GB when you exceed this), unlimited talk & text, international texting, costing $35 a month.

Straight Talk: Verizon network, 10GB data at 4G LTE, unlimited talk & text, costing $45 a month. 

Best family plan deal

Boost Mobile:Sprint network, 4 lines for $125 with unlimited data including high-speed video and unlimited music streaming, also unlimited talk and text.

Cricket Wireless:AT&T network, 4 lines for $100 with unlimited data (though it slows down after 22GB used), unlimited talk & text. BUT its download speed is limited to 3mbps, which is only good enough to stream video in standard definition. 

The Tip Jar is consumer writer Adam Uren's advice column on how to spend, save, and live with confidence. Read past columns here.

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