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Why It’s Ludicrous to Make Payments on a Cell Phone (…and How You Can Avoid It)

making payments on a cell phonePeople have payments on their cars, their house, furniture, and now most of us even have payments on our cell phones!! And quite honestly, with salespeople pushing so hard toward the payment option these days (and giving us zero discounts for buying a phone with cash), it can actually be difficult to avoid making payments on a cell phone. In this post, I’m going to outline (1) why it’s dumb to agree to those payments, and (2) how to actually buy a phone outright.

It’s Ludicrous to Make Payments on a Cell Phone (…and How You Can Avoid It)

Remember the days when you walked into a Verizon store, signed up for a 2-year contract, got a brand new phone that was discounted down to just $200, and then walked out with a smile?

Well those days are gone…

Today, what’s more likely is that you’ll walk in, choose a plan, sign a contract…and then you get the option of either buying a cell phone for $1,000 (okay, it’s actually $999, but let’s get real, that’s a thousand bucks where I come from) or paying $41.63 a month for it – and that’s on top of your service plan amount!

I’ve never made payments on a cell phone in my life, and I don’t intend to start now.

Why? I’ve got 5 reasons actually…

5 Reasons Why I Refuse to Make Payments on My Cell Phone

Payments….they’re for the birds. Here’s why I believe it’s ridiculous to make payments on a cell phone.

1) You’re Shackling Yourself to Your Provider

Let’s say you just signed up with Sprint 4 months ago and now you realize that their service is crap. You want to switch…but you’re still making $40 payments on your cell phone each month…and owe a total of $800 before it’s paid off.

You’re officially shackled to your cell phone service provider until you make that $800 payment… Bummer dude…

2) The Payments are Blinding You From the Ridiculous Expense

When you step onto a car lot these days, what do you notice about the stickers in the front window?

That’s right, they’re telling you how much you’ll pay per month. Nowhere on that entire vehicle will you see anything about how much it actually costs…and that’s completely intentional by the dealer. They don’t want you to get sticker shock because of the $39,000 price tag. Instead, they want to see you nod your head at the $399 payment saying, “Yeah, I can afford that.”

The same is true of cell phones today. The top model iPhone at this moment is $1,449. Holy…shamoleee… Yup, I think I just had that sticker shock Apple wouldn’t want me to have. So instead, they’re offering this phone at a monthly rate of $60.38. It’s certainly not chump change, but there are likely a ton more head-nods from customers at $60/mo. vs. a $1,500 bill at sign-up!

Beware of the “per month” pricing.

Soon after you walk in the door and start to talk about your phone plans, the sales person will probably give you the option of the $50/mo. phone or the $60/mo. phone. If you’re budget conscious, you’ll choose the $50 option (after all, 50 is less than 60!)…but what you’re not realizing is that you just signed yourself up to spend $1,200 on a fricken phone.

When you step up to the counter, be sure to talk in terms of the phone’s total price, not dollars per month.

3) The Cheaper, Older Models Work Just as Well

As we’ve already established several times, the new iPhone costs $1,000 or more…but is that particular model really necessary?

Absolutely not! In fact, it’s ludicrous!

The older models often work just as well as the newer ones (as long as they have sufficient memory), and they’re usually WAYYY cheaper – like $200 instead of $1,000. At this price point, it becomes much more likely that you can pay cash instead of locking yourself in to all those payments…

“But Derek, the payments are 0% interest. Isn’t that always the smart move?” 

Again, absolutely not…

Think about it. iPhones used to max out at about $700. At about the same time as they introduced this 0% payment options, the cost of cell phones suddenly rose up above $1,000. Coincidence? Ummm…no. It’s pretty obvious that Apple, Verizon, Sprint (everyone!) is jacking up the price on these phones to cover the 0% interest option. In other words, they’re charging you more up front so they can call the interest free.

Stop getting sucked into their marketing lies. Instead, buy a phone that you can actually afford (ie. pay cash for it). You’ll be much better off in the long run.

Related: Are You Eating Your Lunch or Is Your Lunch Eating You?

make payments on a cell phone

4) The Hassle Factor Goes Up

When I got completely out of debt, one of the biggest benefits I didn’t expect was the reduced hassle factor of getting all those companies off my back!

  • No more bills in the mail
  • No more incorrect statements
  • And no worries about making the payments on time to preserve my credit

If you decide to buy your cell phone on payments instead of with just a one-time payment up front, you’ll be reminded of that bill every single month for two solid years. And, during that time there’s bound to be something that goes wrong (which thereby increases your hassle factor)!.

You know what’s easier? Paying for a less-expensive phone with cash…

5) The Forced Payment Plan Makes Me Want to Run

When people push me too hard to do something I don’t naturally want to do, my internal alarm system starts blaring. WOMP WOMP WOMMMMM!!!! (with red lights flashing and everything). This is exactly what happened when I was in the Verizon store…

I was there to renew my contract, so I figured I may as well pick up a new phone while I was there. (After all, my old HTC was just barely above land-line status at that point…I could make phone calls, maybe some texts, and that was about it.) I picked up an older model iPhone, asked how much it was…and I was told, “$27 a month.”

“No…how much is the phone if I want to buy it outright today?” was my response.

“You can’t do that anymore, sir.”

I looked at him with extreme curiosity (furrowed brows and all)…”You’re telling me that if I laid down $100 bills on the counter today, you wouldn’t be able to sell me this phone…?”

“Well…we’ve been told from corporate that we should strongly recommend the payment plan to all of our customers…”

…We eventually got on the same page when he realized that I wasn’t going to go for his dictatorship payment plans…

If ever anyone forces you into something you’re not initially comfortable with, it’s best to run… either that or get them to understand and agree to your terms instead. If you just nod your head and agree while your gut is telling you something’s wrong, you’re going to get burned. Happens every time.

How You Can Avoid Making Payments on Your Cell Phone

It’s true. Almost every service provider out there is pushing you into cell phone payment plans – so much so that it can actually be tough to buy a phone outright these days! If you want to avoid making payments on your cell phone (and you absolutely should…avoid it that is), try out these methods.

1) Tire Out the Sales Person

This is what I did – and it’s how I ended up paying just $200 for my fairly new iPhone 6s.

Just talk to your salesperson and let them know you’re absolutely NOT signing up for the payment plan option. If they still refuse to sell you a phone on the spot (for a reasonable price), be prepared to walk. There are other options….

2) Sign Up With a New Carrier

I like Verizon, but they aren’t the only business in town.

I’ve actually toyed around with switching to Republic Wireless. Their basic plan is just $15 a month and then you pay $5 for each gig of data you use (Not too shabby!!). PLUS, they actually want you to buy a reasonably-priced phone (without payments!)!

Related: 2018 Republic Wireless Review: Our Experience After 4 Years (written by my blogger friend Lance)

I hear good things about them, but my only issue is they don’t support iPhone usage…and apparently I’ve become a bit of an iPhone snob because that tiny detail has kept me from ever giving them a shot. If you don’t care what kind of phone you have, this would be a great way to avoid making payments on a cell phone…and still have solid service.

3) Buy Your Phone From Another Retailer

If your carrier of choice refuses to sell you a phone outright, but you like their service, then you should probably look into a site like Gazelle that sells certified phones for specific carriers (like Verizon, AT&T, Sprint, T-Mobile, etc.).

  • You can buy your phone online,
  • Get it shipped to your door,
  • Then simply take it to your service provider and get it activated.

You’ll spend far less on your phone, it’s likely a quality piece since it’s been certified, AND you won’t have to deal with that stupid payment from you cell phone carrier!

Are You Ready to Make the Change?

So what do you think? Are you ready to ditch those payments and get smarter about your cell phone purchases?

If you do, you’ll no longer:

  • be paying the inflated rate on your phone
  • have the hassle factor of those payments
  • be trapped with a particular carrier
  • have to buy those brand new phones at ridiculous prices!!

I say it’s time to stop making payments on a cell phone. What about you?

Battle of the Mind Money Save Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. My last 2 phones have been cheap (I think I paid less than $50 for both combined) and I wish I would have bought cheap phones in the past. Years ago I spent a few hundred dollars twice to get the latest phone. I didn’t finance them, but still was a waste of money. The cheap phones do everything I need them to do.

    • I basically have an iPhone for Facetime… Ridiculous, right? Buuuuuut we can easily afford it and it makes our lives much more enjoyable (with all the video family chats we do). I think I paid $200 for my slightly outdated iPhone 6s. It has been solid and I’m pretty sure I’ve had it over 2 years at this point.

  2. You can also put as much down as they will let you and then pay the balance off on-line after the first bill cycle. I just did this with two iPhones that Best Buy said I couldn’t pay for upfront.

    • Good for everyone to know. Thanks Craig!

  3. Hi Derek, I kept reading and re-reading the headline because I couldn’t figure out why I shouldn’t make payments on my phone. LOL, I quickly realized you did not mean that paying bills with my phone should be avoided at all costs (although who knows for sure?).
    I held out for the longest time before I finally went to a smart phone last summer, and I paid less than $50 for the phone, which does everything a smart phone needs to do. I won’t say I love it, but that’s because I have a wholehearted dislike for several integral properties of smart phones: short battery life and they’re so annoying to use to actually make a phone call, among other things. I keep threatening my family that my next phone will be 2 cups and a string!
    As you can tell, I don’t mind going without bells and whistles to save a buck, but for those who like a little more, I greatly appreciate your advice about spending just enough to get what you need. For $200, there are still enough options to find a phone that can please even a reasonably dedicated “techie”.

    • Ha! Well I’m glad you finally caught on to the title. 😉 Sorry for the confusion.

      If I ever spend $1,000 on a cell phone, it better be able to dress me, brush my teeth, and give me a good clean shave too!

  4. Excellent article Derek! I’m working on an article about things people waste money on. I was doing a little research on cell phone payments when I ran across your article. We have NEVER made payments on a phone. We are completely debt free and feel like this is one of the biggest money mistakes people make (besides buying a band new car). Love your article. Well said.

    • Yup, because until you look to pay cash for a phone, you never really understand how ludicrously expensive they are! I have an iPhone 6s right now and I refuse to get a new phone because I don’t want to spend $500 for a slightly better one! But, if I didn’t mind payments, the $25 per month for 24 months wouldn’t seem all that terrible…BUT IT’S THE SAME THING! Still a waste of money to upgrade every year. Use stuff till it dies and then replace it with something good, somewhat inexpensive, and will last a while.

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