The best and cheapest phone is a capable unlocked model from a budget provider paired with a prepaid or low-cost postpaid plan. Average total cost of ownership can be under $20 per month including service. A recent model with 5G and a decent camera offers the best value.
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The cheapest phone is not just the lowest upfront price; it is the combination of a low-cost device and a low-cost cellular plan that together minimize your total spending over two years. A budget unlocked phone priced around $199 paired with a prepaid plan averaging $35 per month yields a two-year total of approximately $1,039. In contrast, a premium flagship phone on a postpaid plan from a major carrier can cost over $2,500 in the same period. The key is to avoid device installment plans that lock you into expensive service contracts.
Prepaid vs. Postpaid Costs
According to the Consumer Expenditure Survey (2024), the average US household spends $121 per month on cellular service. Prepaid plans, however, average just $35 per month for comparable data allowances. Prepaid plans from budget providers use the same networks as major carriers but at a fraction of the price. They also typically include taxes and fees in the advertised rate, whereas postpaid bills add regulatory and administrative fees that can total $5–$15 extra monthly. The Federal Communications Commission (FCC) notes that 34% of US households now use prepaid or hybrid plans, a share that continues to grow.
| Plan Type | Avg Monthly Cost | 2-Year Total (incl. device) |
|---|---|---|
| Postpaid + flagship phone | $121 | $2,904 |
| Prepaid + budget phone | $35 + $8.29 (device amortized) | $1,039 |
| Prepaid + bring your own device | $35 | $840 |
Hidden Fees and Taxes
Postpaid bills from major carriers often include a regulatory recovery fee (typically $1.50–$3.50), an administrative fee ($2–$5), and state/local taxes that can add another 5–20%. The Tax Foundation reports that combined wireless taxes and fees average 25.4% of the bill in some states. Prepaid plans from budget providers generally quote a flat price that already includes these charges. Always read the fine print: a $40 plan can become $55 after fees. Choosing prepaid eliminates most of this surprise cost.
- Regulatory fees: $1.50–$3.50/month (postpaid only)
- Administrative fees: $2–$5/month (postpaid only)
- State/local taxes: 5–20% of base plan cost
- Prepaid: usually no extra fees beyond stated price
How to Choose the Right Device
Look for an unlocked phone that supports the major network bands (LTE and 5G) used in the US. The best budget models start around $150–$250 and offer a 6.5-inch display, 128GB storage, and a 50MP camera. Avoid phones that require a carrier lock or installment plan. The Bureau of Labor Statistics notes that consumer electronics prices have dropped 12% since 2020, making capable devices more affordable than ever. Buying a previous-generation model or a certified refurbished unit from a reputable retailer can save an additional 30–50%.
Total Cost of Ownership Comparison
When evaluating “best and cheapest,” calculate the total cost over 24 months: device cost + plan cost + taxes/fees. A budget unlocked phone at $199 plus a prepaid plan at $35/month (tax-inclusive) equals $1,039 over two years. A flagship phone on a postpaid plan at $121/month (including device installment) equals $2,904. That is a savings of $1,865 — enough to buy two more budget phones or cover a year of internet service. The FCC’s “Lifecycle of a Wireless Device” report confirms that device subsidies are built into plan prices, so buying unlocked and choosing prepaid is the most cost-effective strategy.