Do You Need Unlimited Data?
Money Savers Guide

Do You Really Need Unlimited Data?

Last Updated:

With the arrival of unlimited data plans from each top four cell phone company in the U.S., our initial inclination is to take advantage of such plans. Unfortunately, the word "unlimited" may be coaxing us to dive for expensive plans we don't actually need.

Furthermore, there is a catch to unlimited data you won't hear about in the commercials. The catch is that your data may not actually be unlimited (gasp!).

Do you really need unlimited data? I have heard this question being asked a lot lately, and it's for a good reason. Although you will not be charged an overage fee for using too much data, you will still likely experience lower speeds once you hit a certain data cap.

Find Out Now

Tired of High Phone Bills? Calculate Your Savings!

Save Now

To answer this question, you first need to examine your data usage habits. Once you know how much data you use, you'll have a better idea of determining if an unlimited data plan is right for you. We're here to help you make that decision.

What Does Unlimited Really Mean?

Unlimited mobile broadband plans are only unlimited to a certain extent, despite what you may have heard on TV. As I mentioned above, large cell phone companies like Verizon and Sprint claim to dish out unlimited data for a small monthly fee, yet they fail to mention their unlimited plans do not provide truly unlimited data.

Here's how it works:

Data usage is the kilobytes, megabytes, and gigabytes you use up while using your smartphone to surf the web, play HD video, stream music, play games, and check social media. Data is only used if your cellular data is turned on and you are not connected to WiFi.

Have you ever heard of data throttling in terms of mobile broadband? Data throttling is when wireless companies put a cap on unlimited data usage accessible at full 4G LTE network speeds to prevent network congestion. For example, if you surpass 22G on the Verizon unlimited talk, text and data plan with others trying to use data in the area, your speeds will be throttled down to 3G or slower during network congestion until your current billing cycle is over.

As you can see, the word unlimited doesn't truly mean unlimited when it comes to smartphone plans. In fact, all plans with no overage charges can be considered somewhat unlimited. Our CEO, Rob Webber published an article about unlimited data plans for the Forbes Finance Council.

Our CEO, Rob Webber published an article about unlimited data plans for the Forbes Finance Council. You should check it out.

Do You Really Need Unlimited Data?

Why Should You Buy an Unlimited Cell Phone Plan?

Now, let's take an overall look at the pros and cons of unlimited plans. Together, we'll determine if the good outweighs the bad and whether you really need unlimited data.

Benefits

  • Pay one fair price for unlimited talk, text, and data: While you do pay one fair price for unlimited data, texts, and calls, this may be possible to do using a limited plan that costs less.
  • You may be able to tether your smartphone into a hotspot: Some unlimited plans will let you tether your smartphone into a mobile hotspot so you can connect your computer and other devices to your phone for Internet access. Keep in mind, however, that speeds are always throttled once you use a certain amount of gigabytes. Additionally, hotspots may be offered on a limited plan with fewer data.
  • No overage charges: While unlimited plans don't have overage charges, neither do most other plans these days. For example, Verizon Wireless now offers overage charge protection on its limited plans so you don't have to worry about being charged if you go over; your speeds will just be throttled.
  • Consider the throttling threshold: Although you never run out of data with an unlimited plan, the same goes for most limited plans these days. The only plus side to unlimited plans is that they usually give you a much higher threshold to reach before they begin throttling your data usage speeds. And, of course, you won't be charged for extra data.
  • You may get a low introductory price: Some companies, like Sprint, offer low introductory prices when you switch to an unlimited plan from another plan or provider. Just keep in mind that these rates won't last forever.

Related: How to Pick the Right Cell Phone Plan for You

Drawbacks

  • Slower data access after a certain amount of data usage: Once you reach your data threshold depending on your provider, you may experience slower data usage speeds when surfing the web, watching HD video, etc. The only difference is that your threshold will be higher than on a limited plan.
  • Video quality limitations from certain companies: Certain companies, like Sprint, limit your video quality when you're streaming via data. Don't forget to look at the fine print!
  • You may use significantly less data than you pay for: If you don't use enough data to warrant an unlimited plan, there's no need to buy one. A limited plan may cost you less money. How much data do you use? Click here to find out!
  • You may be able to pay less with roll-over data and a cheaper plan: Carryover data and overage charge protection may allow you to pay less for more than enough data, depending on how much data you use monthly.

Understanding the Terms and Conditions

Let's get one thing straight: reading the terms and conditions can be a nightmare. Think for a moment--when was the last time you read through those massive blocks of text? It can also be incredibly confusing to understand what the terms and conditions even mean when you decide to give it a read.

That confusion is what caused us to create our cell phone plan comparison tool. We believe that informed consumers can make smart shopping decisions. And because it can be tricky to buy a cell phone plan, understanding the policies and hidden fees is crucial to finding the best value deal.

Below, I will go through exactly what each major carrier's unlimited plan(s) has to offer and which limitations each plan has. If you want to compare other plans, check out our cell phone plan comparison tool.

The Verizon Unlimited Plan

The Verizon Wireless Unlimited Plan provides free mobile hotspot tethering and HD video streaming for $80 per month for one line (plus taxes and fees), according to our comparison data. The price per line decreases as your number of lines increases. Ideally, you could have four unlimited lines at $45 per line plus taxes and fees, which translates to a monthly fee of $180. The unlimited plan comes with hotspot tethering and HD video streaming.

verizon data throttling

If you surpass 22GB on the Verizon Wireless Unlimited Talk, Text and Data Plan with others trying to use data in the area, your speeds will be throttled down to 3G or slower during network congestion until your current billing cycle is over.

verizon terms and conditions

If you decide to tether your phone into a mobile hotspot with the Verizon unlimited plan, you'll only get 10GB at 4G LTE network speeds. After that, you'll be bounced back to 3G or lower until your billing cycle is over. The speed will be slower depending on how much congestion is on the network.

Verizon also has a prepaid unlimited plan at $80 per line for those who want to pay before they use up data. The only catch is that it doesn't include mobile hotspot tethering and only has SD video.

To learn more, compare Verizon's cell phone plans here.

Save Now

Compare Cell Phone Plans

Save Now

AT&T Unlimited Plan

The AT&T Unlimited Plus Plan starts at $90 for one line with a paperless and automatic debit discount, according to our data. AT&T's Unlimited Choice Plan provides one line for $60 after paperless and automatic debit discounts. You can see below for a quick snapshot of what each plan offers and how they differ.

at&t unlimited plus

The difference between the two plans is that the Plus plan includes 10G of tethering, an HBO credit within the first two billing cycles, high-speed internet, and HD video streaming while the Choice Plan does not. The Choice Plan comes with SD video and max data speeds of 3Mbps.

at&t unlimited choice

Similar to Verizon, AT&T's Plans offer 22GB of high-speed Internet data usage. After that, your Internet will be throttled to slower speeds until your next billing cycle. The actual speed of your data usage will depend on the amount of congestion on the network at the time.

AT&T terms and conditions

Keep in mind, AT&T has the most expensive unlimited plan out of the big four. Make sure to read the fine print in the terms and conditions for details on throttling, video streaming, and pricing.

Sprint Unlimited Freedom Plan

Sprint's Unlimited Freedom Plan comes with HD streaming, mobile hotspot tethering, and VPN and P2P services. They have promotions often, so look out for low introductory prices. Just keep in mind that the price will increase as the months go on.

They usually charge a starting price of $50 per month per line plus taxes and fees. For a family of four, you'll spend $120 per month. Our comparison table has already calculated the hidden fees and discounts for you, so you see the true price you'll pay.

The Sprint Unlimited Plan will give you 23GB of high-speed data usage before throttling it down to slower speeds. Like Verizon, the Sprint Unlimited Plan will give you 10G of data for tethering before reducing your speeds to 2G.

sprint mobile hotspot

Fortunately, Sprint is the only carrier of the top four that limits your video streaming quality to 1080p. They will also throttle gaming to 8Mbps and music streaming to 1.5G. If you run out of 4G LTE data, you can buy more at $15 a GB to last the rest of your billing cycle. Don't forget to enroll in autopay for $5 off your bill.

Also, make sure to check the fine print for extra taxes and fees from Sprint.

sprint fine print

T-Mobile One

With T-Mobile's Unlimited One Plan, you can pay $70 per month for two lines. Sharing data with a family of four will run you $140 per month. These prices include an Autopay discount as well as taxes and fees, but they may not last for long.

The T-Mobile One plan also includes SD video streaming and unlimited mobile hotspot access at 3G speeds only. With the new T-Mobile Unlimited Plus Plan, you'll get mobile hotspot access at 4G LTE speeds up to 10G, HD video streaming, and unlimited in-flight WiFi, but it costs an extra $5 per month per line.

T-Mobile plans with unlimited data will not throttle your data usage until you've reached at least 30GB, according to their terms and conditions. T-Mobile plans have recently increased their speeds from 28GB and are currently number one for largest data cap on unlimited plans.

t-mobile data throttling

If you're looking for the unlimited plan with the least data limits, T-Mobile may be the way to go. They do, however, have a data cap on mobile hotspot data usage at 10GB like the other providers. Once you pass that, your speeds with be reduced.

T-Mobile also has a prepaid unlimited plan starts at $45 per line per month. The plan comes with 4GB of 4G data and unlimited talk and text. Keep in mind, however, there is a $10 sim card starter kit required for prepaid plans. You'll need to insert the sim card into an existing phone or buy a new/used one.

Related: Tired of Expensive Cell Phone Bills?

So, Do You Need Unlimited Data?

Here's a good rule of thumb: if you don't use more than the amount of data allotted by a cheaper plan in a month, you should opt for the cheaper plan. If your family plan is constantly going over your allotted amount of high-speed data, however, an unlimited plan is worth thinking about.

Unlimited plans are great, but they can be expensive! And with things like overage charge safety protection and carryover data now in place, you'll likely have more than enough data with a cheaper plan and no overage fees anyway.

Did You Say No More Overage Charges?

That's right, after years of hefty overage charges for running over allotted data usage, the big four companies have finally gotten rid of them once and for all. Most plans these days have carryover data and protection from overages, so the data you don't use each month carries over to the next and you don't have to worry about getting charged for going over.

In fact, the same thing happens when you go over your data on a limited plan with overage fee safety protection than with an unlimited plan: if you go over, your usage speeds just slow down until your next billing cycle and you can buy more 4G LTE data if you please. In this sense, data is truly unlimited, even without an unlimited plan.

Keep in mind that this may not be true on smaller carriers, like MVNOs.

With the factor of overage fees out of the way and with carryover gigs adding up each month, I'd say an unlimited plan isn't worth considering unless you actually use more than 10G of data per month.

You can check how data much you typically go through each month using our simple Data Usage Calculator. Data monitoring can help you make a more educated decision as to whether or not you need an unlimited plan.

Related: How to Check Your Data Usage

Recap

After taking the time to understand unlimited plans, I hope you have a better idea of whether or not you really need one. If you have any questions, don't hesitate to leave me a reply in the comments.

Overall, the only upside to an unlimited plan is that its data throttling happens at a much larger number of gigabytes than a limited plan. It also may include some cool features like HD streaming and mobile hotspot tethering. If you don't need more than 10GB of data, however, you can probably find these features in a cheaper plan.

If you're thinking about switching your current plan, our cell phone savings calculator will fill you in on how much money you could be saving with a different plan. All you have to do is type in your zip code, pick your carrier, and select how many gigabytes you're currently paying for at what price. Once you're done, you'll know exactly how much you could be saving. If you're still a little on the fence, we have an article where we discuss which cell phone carrier is best for you.

Which plan should you choose? You can read our buyer's guide to cell phone plans for rankings, comparisons, and in-depth analysis of the major cell phone plans.

Find Out Now

Tired of High Phone Bills? Calculate Your Savings!

Save Now