I heard 90% of americans buy phones only on contract, what does that mean?

7 comments

1. It means instead of paying the $1000. for it at the store, you sign a two year contract with the phone service provider, Verizon wirelss, At&t, T Mobile etc and pay an extra $25, or whatever the charge is, a month on top of your phone bill.

   Basically You make monthly payments.

2. Source? That number seems high.

   You sign a contract and pledge to use the carrier for X amount of time, and a new phone is built into the monthly charge

3. Phones in the US used to be subsidized by the phone company if you signed a contract to stay with them. So you may get an iphone if you stay with say you will stay with company X for two years. They just built the price of the phone into their plan. So you may pay $75 each month, which covers the service and the cost of the phone. After the two years you could upgrade, or not, but you kept paying the same rate monthly, regardless.

   As cheaper options came up for service, the new thing is for them not to build it into the monthly service cost, but to act as the entity financing the phone. Now, you pay $50 for the service and $25 for the phone each month. You don’t have to stay with the same service provider, but if you leave, you will have to pay off the phone. After the phone is paid off, that $25 cost disappears.

4. Buying phones on contract allows people to buy above their means, as the price is rolled into a [rent-to-own](https://en.wikipedia.org/wiki/Rent-to-own) situation where you’re paying for both the service and installments on the phone. The companies do this as a contract in order to lock you in as a customer for the period of the contract.

5. I bought my phone on contract with ATT. They gave me a pretty substantial discount if I paid it off over three years since it would lock me in with them as my provider. The phone was cheaper than paying cash this way.

6. It’s basically a lease, not to be confused with what would be called an EMI in OPs country. Basically the mobile service provider subsidizes a phone and you basically have it on lease and are stuck with that service provider unless if they buy out the phone. In OPs country arguably the only phone with a similar plan is the Jiophone. It’s subsidized, can’t be taken to another company etc.

7. Us society runs off debt like credit,contracts