lockedThe Google/LG  Nexus 5,  Galaxy S4, Sony Xperia and the HTC One are among the many emerging great smartphones being sold in factory-unlocked versions.  But what does out-of-pocket splurge for these phones bring you?  For most consumers, it brings confusion.   Yet there are many benefits offered by the unlocked phones.  For savvy consumers, there are some very appealing secret benefits to unlocked phones.   So, let’s get get cancel the confusion and get savvy about smartphones.  There are  four big factors you want to consider with unlocked phones are:

Freedom Factor:  They give you options among carriers

Flexibility Factor:  Can be customized and fit to your preferences

Friendly Factor:  They are budget friendly and have better resale value

Flyer Factor:   Best option if you travel to other countries

The big downside is that if you are a Verizon customer,  it will give you a very hard time in using unlocked phones.   Word on the street is that Verizon will obstruct customer efforts to use an unlocked phone on Verizon’s network.    Both Verizon and Sprint use CDMA networks that give them more control over approving use of phones on their network.    AT&T and T-Mobile use GSM networks, along with most countries in the world, and require only a SIM card to use their GSM networks.

So, for those customers who haven’t sold their souls and smartphone choices to Verizon, you may want to seriously consider purchasing an unlocked phone.   Amazon is a very good source for factory-unlocked phones  (we’d avoid the user or carrier-unlocked phones often sold on eBay).    The newly released Google Nexus 5, in particular, is a pretty amazing value at its list price of $349 and can be purchased directly from Google.  But there are other options that allow you to take advantage of these four factors.

Freedom Factor

Unlocked phones can switch GSM networks when necessary.  This is a huge for people who frequently travel since it allows them to switch to other available network providers once they are out of their current provider’s coverage zone, as will be discussed below.   But it also allows you to switch to a different network provider with better rates or service, especially if you are unhappy with your current cellular carrier.

But be careful — you want a factory unlocked phone.    Here’s why:  while phones that have been unlocked by someone other than the manufacturer should still function properly ,you may need to adjust certain settings and the warranty may no longer be valid. Phones unlocked by the manufacturer may require some setting adjustments, but the warranty on these phones remains intact.

Most of the smartphones come locked when purchased from your carrier and there is usually a fee involved if you want to unlock the phone.  The Nexus phone, mentioned above, doesn’t face this problem as they are sold factory unlocked and you can use them on any network of your choice.  You don’t have to jump through hoops to get your carrier to unlock a phone once your contract is up, you can also use another carrier’s SIM card when traveling overseas, and it is also very easy to sell smartphone when it is not locked to one carrier.

Flexibility Factor

Unlocked phones also give more flexibility in terms of phone features and customization.  Third-party applications can more readily be installed on unlocked phones because of the absence of locking software to limit the access to these features.   You also get more control on the applications that run on the phone, since it is not pre-programmed by the service provider.    It’s much easier to  customize the look and feel of his her phone, and do away with preconfigured settings such as service provider wallpapers, notification sounds, and alert messages.

Friendly Factor

Unlocked phones may seem to be more expensive at first, because one has to pay for the full retail price of the phone from the very start, but appearances may be deceiving.   In the long run, they may be a far better deal.   Think two-year contracts — or better yet — don’t think about them because they do not come with long-term contracts, which lock one to a particular carrier.  You can opt to change network providers at any time without having to wait for the contract to expire or paying early termination fees. On a budget?  You can also use the phone with inexpensive, prepaid SIM cards, which provide cheaper call and messaging rates.

It gets even better if you plan to sell the old cell phone. Unlocked phones can be sold for more — one source suggests a premium of  30% over  a locked unit. It also attracts more buyers since they can easily use it with their existing network. So, if one is you try to sell a BlackBerry phone that is locked to AT&T, the only buyers that would be interested in it are AT&T subscribers. However, if you sell an unlocked Blackberry phone, it becomes more marketable to other network subscribers and even to people from other countries. More possible buyers = more value.

Flyer Factor

A huge reason for buying an unlocked phone makes sense is if you actively travel overseas or if you plan to live in another country. Aside from AT&T, T-Mobile is the only other big GSM carrier in the United States, but Europe and Asia are filled with them. China, Mexico, Germany, Russia, France, Spain, and the United Kingdom are just some of the countries that support GSM carriers.

Unlocked phones eliminate expensive roaming charges. When a person travels abroad and places a call, the phone carrier usually charges an add-on fee depending on the destination. This roaming fee is billed on top of the monthly subscriber fee, and can add up to a significant amount. Unlocked phones allow the user to simply buy a SIM card from the local carrier. This way, one can have a local phone number and pay local rates for calls and messages without the roaming charges.  If you have an unlocked phone, when you arrive in a destination country that uses GSM networks you can simply pick up a new SIM card from a local carrier. If you often hop around to multiple countries in your travels, it is not only possible but relatively easy to have multiple SIM cards on hand for different carriers and countries. You’ll be able to place local calls without tacking on additional international roaming fees from your own carrier, and if you run out of phone minutes it’s often an extremely simple process to “top up” your card with more minutes or data either right from your phone or via the web.

Carriers Offering Service Plans

Currently, we’ve not been able to locate CDMA-based carriers who are friendly to unlocked phones.    So you are limited to GSM-based carriers, like AT&T and T-Mobile.  The latter has recently been very open to unlocked phone customers and offers plans between $30-$50 for such customers.   HOWEVER,  we also recommend you look at some of the resellers who use GSM networks, like MetroPCS, Solavei, GoSmart Mobile and Net10.   There’s a good blog about these alternatives.   Moreover,  Walmart is apparently now offering service plans to customers with unlocked phones.