An equipment repayment plan is still a contract, T-Mobile.

T-Mobile did not just end the era of smartphone contracts, they gave them a new name. They did, however, start the ball rolling on the death of major smartphone subsidies – a trend you’ll likely see a lot of US carriers get on board with in the next few years.

There is no major difference as far as your wallet is concerned between upgrading early on an ERP plan versus a contract. I can walk into an AT&T store today, buy an iPhone 5 for $200, and cancel my contract the next day and pay $350.

If you walk into a T-Mobile and buy an iPhone 5 for $100, and you want to cancel your service tomorrow, you still have to fork over $480 if you don’t want to make those monthly payments. How is that not a contract? You have contracted to repay the remaining cost of that phone, whether you keep T-Mobile service or not.

Now, you might say that 18 months in, you’d have to pay an early upgrade fee at AT&T (usually $200) if you wanted a new phone, but not at T-Mobile. That’s true. But you’ve also been paying a $20 surcharge every month to pay off your phone at T-Mobile, and that’s cost you $360 at this point, along with the $120 still left to repay. That’s not nothing.

T-Mobile is still finding a way to get money out of you, and they are actually saving money by making you finance your own expensive smartphone habit with a de facto contract. Remember, Verizon, AT&T, and Sprint are still eating the bulk of the cost of your phone in exchange for your 2 years of loyalty.

T-Mobile is still a good value, but this is still a contract.

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