T-Mobile's 'Value' plan beats 'Classic' any day

Walk into a T-Mobile store and a second cell phone payment option might catch your eye: the Value plan.

At first, the plan looks a bit like an interest model: a lower up-front cost for your purchase, say $50 less, followed by 20 months of equal payments of $20 apiece. In other words, you spend most of your two-year contract paying hundreds of dollars more for your phone.

But peer closer and the Value plan actually saves you over $100 during a two-year contract, and more if you keep the device longer than its typical two-year tenure.

How? You pay for the unsubsidized or less-subsidized cost of the phone, but also pay a smaller monthly data rate.

Let's take the Nokia Lumia 810 as an example, using T-Mobile's new unlimited plan. After a $50 mail-in rebate, the phone costs $100 on the value plan, and $150 on the Classic plan. Yet, the Value plan also requires that you pay $400 more for the phone over the next 20 months.

The trade-off is that on the value plan, you also pay $20 less for your data each month. Over 24 months, it works out to save you $130 over the contract lifetime. However, if you continue on a month-to-month basis without renewing your contract, you'll still pay $70 for the plan.

The catch
The one catch is that the Unlimited plan I used as a control doesn't work with a hotspot, though the same mathematic principles apply across all of T-Mobile's plans.The bottom line is that you're looking at at least $100 difference by choosing the Value plan over the Classic plan -- the latter, by the way, is the same structure found with other U.S. carriers.

For even more potential savings, be sure to check out my sample comparison of prepaid plans versus contract plans.

Article updated at 12:06pm PT to correct where you can take advantage of the Value plan.