As of February 11, 2015, a U.S. law called the "Unlocking Consumer Choice and Wireless Competition Act" went into effect. What does this mean?
You can unlock your phone and [hypothetically] sign up with another carrier, whether you have a contract phone or a phone on an off-contract, prepaid plan (as I recommend here).
Image credit: PCMag.com, link below
The catch? You have to submit a request to unlock your phone (your carrier has two days to comply with this request), and the law states that you must make that request within one year of activating the device.
[Does this mean that you're stuck with a locked phone if it was activated more than a year ago? That's what the law seems to imply--check with your carrier to see if their policy permits this anyway.]
The other catch is that, if you're on a contract that subsidized the purchase price of your phone, you must complete the term of your contract before your carrier has to unlock the phone. So, unfortunately, the majority of the country is still under contract.
Another consideration is that some carriers use proprietary equipment--so your phone, even if it's unlocked, may not be compatible with a competing carrier!
These limitations certainly put a damper on the potential excitement about this news. Nonetheless, it's a step in the right direction! Carriers are no longer able to put their customers in such a tight chokehold. Hopefully more people will use this opportunity to save money by switching to a more cost-effective plan, or at least use this leverage to bring their costs down!
Options:
Walmart offers Straight Talk, with unlimited text, minutes, and data* for $45/month. They also promote Family Mobile, which is available for as little as $30 per month for a similar plan. However, buyer beware: this plan gets an awful lot of poor reviews on ConsumerAffairs.com [link here]
Not much of a talker? T-mobile offers a $30/month plan with unlimited text and data*, but only 100 minutes of talk. Virgin Mobile offers a $35/month plan, also with unlimited text and data*, but it comes with 300 minutes per month.
Why the asterisk after "data?" Because, although you may have unlimited Internet access on your phone, it'll be throttled to slower speeds after you use a certain amount of data. For the T-mobile plan mentioned above, you get 5 GB of data at high speed. The cheapest $30 Walmart Family Mobile plan throttles you after only 500 MB of data--so don't spend too much time browsing the Web on your phone with this plan! Straight Talk will throttle you after 3 GB of usage (in 2014, this limit was raised from 2.5 GB). The limit on the Virgin Mobile plan is 2.5 GB of high-speed data.
The point here is that everybody will throttle your data--even if you're on a contract! So, you might as well pay less for one of these prepaid plans...
You can read more about unlocking your phone at the following links:
How to Unlock Your Phone: http://www.pcmag.com/article2/0,2817,2476565,00.asp
US Carriers, You'll Have to Unlock Those Phones:
http://www.cnet.com/news/new-regulation-requires-us-carriers-to-unlock-user-phones/
Here's the CTIA document with boring legal details: http://www.ctia.org/docs/default-source/default-document-library/ctia-consumer-code-for-wireless-service.pdf?sfvrsn=2
Unlocked Phones Reality Check: More Pain Than Panacea http://blog.laptopmag.com/unlocked-phones-reality-check-more-pain-than-panacea
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