How to save money on your cell phone bill

Somehow, in the past 20 years, cell phones have evolved from a convenience to a necessity. An expensive one. As the devices have become more integrated into our lives, monthly mobile bills have swelled. According to a recent survey by Cowen and Company, a financial services firm, the average customer of one of the Big Four cellular providers (AT&T, Sprint, T-Mobile, and Verizon Wireless) spends more than $90 per month for individual service—and the figure is $111 for iPhone owners. (Prepaid phones were not included.)

If that seems like too much to spend on mobile bills, it is. Our own survey data and industrywide analysis of smart-phone plans confirm that customers who are still hanging on to traditional two-year mobile phone contracts are getting rooked.

The good news is that the cellular-service industry has changed in the past two years. Big providers are offering new plans that decouple the cost of monthly service from the cost of the handset, and they are competing to steal each other's customers. Meanwhile, smaller providers are pioneering new ways to keep costs down—and winning fans as they do it. Three of the upstart providers—Ting, Consumer Cellular, and Republic Wireless—recently earned top Ratings in the Consumer Reports National Research Center's annual survey on cell providers. The study encompassed 63,352 ConsumerReports.org subscribers—and Ting's overall score was the highest we've ever seen.

If your monthly bills are draining your patience along with your bank account, we have solutions. And if you're thinking of upgrading your phone, find out why it's the right time to buy a new phone. (And watch our smart phone buying guide video, below.)

In the current wireless market, the worst buying decision you can make is to lock yourself into a multiyear contract. Sure, signing on for two years of service to put a $650 iPhone 6 in your pocket for just $200 may seem like a good deal at first. But it's cheaper to buy the same phone through an installment plan, where you pay for the handset through monthly, no-interest payments over a couple of years. The line access fees on installment plans are typically lower, and you won't have to put any money down.

But the real savings pile up after the phone is paid off—you could see your monthly bill drop by $30. By contrast, the bills will most likely never go down on a contract plan. Installment plans are particularly attractive now because handsets have improved greatly. If you buy a highly rated phone, you should be able to use it happily long after you've finished paying for it.

But what if you're trapped in a bad contract with a high termination fee? The first thing to do is investigate your own provider's lower-cost alternatives—simply go online and see what changes you can make without incurring extra charges.

If you want to switch providers, you may be able to get a new carrier to buy out the remainder of your contract. In the fall, Sprint and T-Mobile offered several hundred dollars per line to consumers who brought a phone and switched from another carrier. And in December, Sprint started halving the monthly rate for customers defecting from AT&T or Verizon.

Find out how to get the best cell phone plan for your family—and save up to $1,000 a year.

Once you've freed yourself from your contract, it's time to find a better deal. Start by calculating the data requirement for each of your devices. (These days, plans focus on data more than voice. Say bye-bye to unlimited data plans and hello to dirt-cheap voice minutes and texts.)

Look at your old bills, consult your carrier's data calculator, or use a data-measuring app such as My Data Manager to figure out how much data you're using. Most people can get by with 1GB to 2GB per month, especially if they make ample use of Wi-Fi connections. If someone in your family travels a lot and is frequently away from a Wi-Fi connection, figure on 4GB to 5GB monthly for that phone.

Although smaller carriers may seem to have the edge on the big guys for value, there are some good reasons to stay with the big carriers. In our survey, Verizon Wireless earned decent marks across the board for voice, text, Web, and 4G reliability, and AT&T was a standout for 4G service. T-Mobile, on top of offering the best prices among the big carriers, ranked high for resolving issues promptly and for staff knowledge. T-Mobile, Verizon, and AT&T all earned very good marks for staff courtesy. (Sprint, by contrast, scores poorly on most measures.) If a fast, reliable data network and a well-oiled customer-­service operation are your priorities, bigger may be better.

The quick-and-dirty guide: You'll probably find lower prices on T-Mobile, better across-the-board service on Verizon, and really great 4G data access—very big with power smart-phone users—on AT&T.

The happiest customers in our survey were those using less popular services, such as Consumer Cellular, Net10, Repub­lic Wireless, Straight Talk, TracFone, Ting, and Virgin Mobile. People like the carriers for their low prices, and several of the companies also scored very well for service.

As an example of what you might pay, Consumer Cellular can provide a family of three with 1,200 voice minutes, 15,000 text messages, and 2.5GB of data for just $80 per month—for all three lines. You can buy a cheap flip phone from the company for about $35 or step up to advanced models such as the iPhone 6, which costs $150 up front, followed by 20 monthly payments of $25.

The small carriers use varied approaches to pricing, and there are some complexities to master. While Consumer Cellular charges a flat fee each month, Ting offers what's known as a pay-as-you go plan. You pay a barely-there access fee of $6 per phone line and cheap additional rates such as $9 for 500 minutes of calls and $19 for 1GB of data. The bills vary with how many minutes and megabytes you actually use—you could end up paying even less.