Tips for shopping for cell phones and service plans (part 1)

If you've been paying close attention to your cell phone bill, you might have found a few reasons to feel good about your finances. That's because these recurring expenses that have become a staple of household budgets in the U.S. are actually getting cheaper - so much so that economists from the Federal Reserve say it may be contributing to lower inflation, a win-win for consumers.

"Cell phone plans are actually getting cheaper on average."

According to Fed data from the second quarter of 2017, the cost of wireless services contracts was nearly 13 percent lower than at the same time last year. That was the biggest decline recorded in this category since 2001, when cell phones were only just taking off among the American public.

This steep price drop is attributed largely to increased competition between wireless carriers. The so-called Big Four - Verizon, Sprint, T-Mobile and AT&T - are each vying for business by slashing contract costs, particularly for unlimited data plans. Consumers also have benefited from greater freedom of movement between carriers or devices thanks to shorter contract terms, and are even able to tie in cell phone leases or purchases to ensure they always have the latest and greatest device.

With all this in mind, and given the rapid pace of new phone releases, you might be tempted to research and choose a new device and contract. But even though prices have fallen in this market, it still represents a significant slice of your budget. Keep in mind the basics of cell phone shopping and a few tips on finding the service contract that fits your needs.

Devices: Apple or Android?

Smartphones - capable of making voice calls as well as performing a host of web-enabled tasks - used to be considered a luxury item, but they are now widespread and considerably more affordable compared to just 10 years ago. Most service contracts are designed to supply voice, texting and data services over their cellular network, so they often come bundled with a smartphone. If you need a new device, you will be faced with two general options: Apple's iPhone or a phone using Google's Android platform.

For those who aren't very familiar with the two, here's how it breaks down:

iPhone

If you already have an iPhone, you probably know you want to either stick with it or get the latest version. As a hallmark of consumer tech in the last 10 years, Apple has developed a loyal fanbase for its mobile phones. This is thanks in part to its streamlined interface and familiarity for those who are used to using iPhones.

PhoneWhen in doubt, choose the device you're most familiar with as you're shopping for a new phone.

Electronics blog Tom's Guide noted that the big difference between iPhones and Androids is the fact that Apple designs both the device itself and the software it runs (iOS). That allows for relatively seamless integration if you're upgrading from an old iPhone, and makes them generally more user-friendly if you're completely new to iPhones. Apple currently sells seven different models of iPhone, each with different options for storage. That may sound complicated, but it's much easier to compare each model against Android-enabled phones, which are manufactured by different companies and might even run different software versions.

Android

Android is the name of the operating system designed by Google that is installed on phones made by many different manufacturers, including Samsung, LG, Motorola and many more. Why opt for Android over the iPhone? The biggest differentiator is price. While the least expensive new iPhone retails for $350, and can cost nearly $1000 outside of a contract, Android phones are often much less expensive. According to tech review site Wirecutter, a decent Motorola running Android can be bought for around $100. For certain carriers and contracts, the phone might even be included in the subscription. The wider variety of Android-enabled phones means you can also find one that might have functions that iPhones don't, if you're willing to pay more.

Cell phone carriers offer different plans that allow you to either lease a device, pay it off along with your monthly service charges, or make some other arrangement. So if you can't decide between the two major phone platforms, and price is less of a concern, pick the one you're most familiar with. People who use other Apple products like the Macbook or iPad will find the iPhone fairly intuitive, while those who just want an affordable, no-frills phone should find an Android model that will satisfy them.

In our next blog, we'll discuss some tips and tricks for shopping and switching phone contracts.

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