Are you being ripped off? The truth about US phone plans

The iPhone 18 Pro was just released by Apple, and every large telco is telling you that you can have it for $0 up front. Well, we’re here to tell you the truth about that cost, because it’s likely costing you more than you realize.

When it comes to buying and using smartphones, the majority of Americans are overpaying and have no idea. That's because we're relying on expensive postpaid plans. And if that isn't bad enough, we’re constantly being told we need to upgrade our phones. The fact is, US consumers are being mis-sold information and ripped off. So today we’re lifting the lid and sharing how you can save more than $700 a year. Keep reading to find out how you can save hundreds on your phone plan.

Postpaid and prepaid: What’s the difference?

A postpaid plan is a mobile service plan where you use the service first and pay for it later, typically at the end of a monthly billing cycle. With postpaid plans, you are often offered a “free” phone as part of your commitment or renewal, paid off in installments over a set period, like 12, 24, or 36 months. These plans average $109 per month. Then, once you’ve paid off your phone, there is always a newer phone available, and you are then marketed to upgrade to the “better” device, which actually ends up costing you even more.

But what if we told you your carrier has you paying more than you should? Like two times more. Let's compare this to prepaid mobile phone plans. Prepaid mobile plans that operate under the same parent company as the big post-paid plans offer the same unlimited data, talk and text on 5G and 4G LTE networks, but at a lower price. They do this by separating the cost of the service, the device and other perks. Choosing a prepaid plan means you can bring your own device. The savings of prepaid vs postpaid jump up even more if you resist the constant upgrade cycle. 

Why that “free” phone is not really free

If you recently received a new “free” phone from your carrier, check your bill again.  There is no free lunch.

Here’s the intel – postpaid phone plans are offered by carriers, but come with a catch and a commitment.  With a postpaid phone plan, your device is locked to the carrier. This means you can only use it with their service. Not only that, but they will be charging you for a premium service for the next 36 months as you pay off that device. Then, before you’ve even paid off your device, they will offer you an updated plan with the newest iPhone, which is often difficult to say no to, because it’s convenient. But many US consumers don’t understand the hidden costs.

With postpaid plans, carriers hide the cost of your phone inside a higher monthly fee, and what you really have is a device payment plan. That bundle may feel more premium, but it’s not the case – make no mistake, you are going to fully pay for that device (and then some).

Here’s another cost you might not think about. Producing an average smartphone requires extracting and processing 586 pounds of natural resources. That’s more than 1,300 times the weight of the phone itself. Each device has at least 60 raw materials including cobalt, copper and gold used to make your phone fast and efficient. But mining these materials is having a catastrophic impact on the planet and its communities, including water pollution and soil contamination impacting crops, and leading to an impact on health and disease. The most effective way to reduce the impact of your phone isn’t necessarily to recycle it, but to keep it in use for longer. Repairing, refurbishing, or simply keeping your existing device for longer means getting more use from the resources that have already gone into making it and less demand for new ones.

Breaking down the costs: how much could you save?

This table shows data from a standard postpaid carrier plan with the newest iPhone 18 Pro, offering unlimited data for a single user, plus one of those “free” devices. Our example shows a 3-year timeframe to account for the duration of the commitment until you really own your device.

Let's assume you trade in an old phone and get a "free" model in exchange for your trade-in. This service retails at $105 a month. It comes with 5G, some hotspot allowance, and a nice discount on a streaming service.

Here’s where the sneaky additional fees and extras come in. First, there's a one-time $35 activation fee to set up your plan. Then, there’s sales tax – these differ depending on where you’re located in the US, but it’s usually an average 26.8% tax added on to your cost. All of a sudden, you're paying an extra $250 a year in sales tax. Counting up the average monthly cost, that’s around $110 per month for your phone and service.

RefurbLane x Visible by Verizon

Let’s compare that to a prepaid plan offered via Visible by Verizon. We run a partnership with Visible, which lets RefurbLane customers unlock exclusive savings. With Visible, paying less doesn’t mean lesser quality.

Say you purchase an iPhone 16 Pro from RefurbLane in our Premium grade, which means flawless body condition and battery life. You your iPhone 12,  pay for that device, and for your service, you select Visible’s most popular unlimited plan, coming with:

• Unlimited data, talk & text on Verizon’s 5G & 4G LTE networks

• High-risk spam and robocalls blocked

• Unlimited use of your phone as a WiFi connection

• Unlimited talk & text to Mexico & Canada

Through our exclusive RefurbLane offer, all this comes to you for just $20 a month, taxes and fees included.

So let’s tally that together and look at the exact figures of how much you could be saving. Using our example, where you purchase an iPhone 16 Pro in Premium grade, while trading in an iPhone 12. That costs you $47/month for your phone and service – and 80% less than the $110 you were paying before.

The total savings would tally up to $744.97 a year, or a massive $2234.92 over the next three years. Those savings could buy you three more iPhone 15 Pro devices from RefurbLane, or another 40 months of your mobile plan with Visible.

Or, you can look at it this way. At the end of 3 years (36 months), you will have $2,590.47 if you invest $62 at the end of each month, or $2,612.06 if you invest at the beginning of each month, assuming a 10% annual return rate compounded monthly. Out of this total, your total out-of-pocket contributions will equal $2,232.00, meaning you will have earned up to $380.06 purely in compound interest.

See, it pays to do the math.

Switch now, and bag yourself some savings

So what’s stopping you from switching? 

You don’t have to take our word for it – get out your bill and view the math for yourself. Check out this comparison tool to see how different plans from major and discount carriers match up, and how much you could be saving.

If you’re currently on a postpaid plan and want to switch, it’s easier than you think. If you’re on a device payment plan, you have the option to pay off your device in full. We recommend contacting your service provider for specific details, and we’ve listed information from three of the major carriers on how you can complete a device payoff:

• AT&T 

• T-Mobile 

• Verizon

Once it’s paid off, you’re free – you own that device. Then you can bring your own device to a prepaid plan, or trade-in for a refurbished one from RefurbLane.