Stop Overpaying for Your Cell Phone
Put down your phone for a minute and listen up. Whether you know it or not, there’s a good chance that you’re blowing money unnecessarily on your cell phone bill each month. As of last year, the average cell phone user spent $63 a month on his or her cell phone bill, despite the fact that the majority of consumers talk on their phones for less than 200 minutes a month. That’s a lot to pay per minute, and the average monthly bill has likely gone up over the past year as more Americans continue to adopt smartphones with pricey monthly data plans.
Now, we’re obviously not going to argue that you should give up your cell phone all together. I personally am so addicted to my iPhone that I’m probably more likely to forget the keys to my apartment in the morning than my cell phone. Yet, the vast majority of Americans are spending more money on their phones than they need to.
According to BillShrink, an online service that helps consumers cut costs on everyday expenses, 80% overpay for their cell phone bills, and many do so by a substantial amount. Schwark Satyavolu, the CEO of BillShrink, told us that the average consumer overpays by $500 over the course of a two-year cell phone contract. With that money, you could buy yourself a better phone and sign up for a whole new contract.
Here is a breakdown of what consumers tend to overpay for and some tricks to cut down your monthly cell phone bill.
Photo Credit: barbaranixon
Ditch the Unlimited Plan
Perhaps the biggest mistake that consumers make is signing up for an unlimited calling plan thinking they are getting the best deal in the long run. “Unless you're spending a significant number of minutes on the phone - like 2,000-plus minutes on the phone – you probably don’t need an unlimited plan, which have hefty monthly charges,” Satyavolu said. Even if you don’t have an unlimited plan, you may still be signed up for a plan with more minutes than you need. Obviously, you don’t want to go over your allocated minutes and throw away money on ludicrous per-minute fees, but if you leave hundreds of minutes over at the end of each month, you are still wasting money.
This is also an issue for smartphone users to consider now that phone companies like AT&T (Stock Quote: T) and Verizon (Stock Quote: VZ) are beginning to move away from the unlimited data plan model. At the moment, an unlimited plan costs about $30 a month, while a 200-megabyte data plan from AT&T costs just $15 a month. As AT&T notes and BillShrink confirms, the majority of smartphone users consume less than that amount.
Photo Credit: bvsciguy
Besides paying for more minutes than necessary, consumers sometimes fork over money unknowingly for extra fees. For example, Satyavolu notes that some cell phone users end up paying $3 a month for emergency roadside assistance or international calling, even though they never make use of these features. On top of that, some carriers have been known to tack on an activation fee of as much as $35 when you sign up for a new account. “These fees should be included in the price of the phone, but they rarely get mentioned by salespeople,” Satyavolu said. “Scan your bill for at least two months after signing a new wireless contract to find this fee, then complain about it. Many smooth talkers talk their way into refunds.”
Photo Credit: troismarteaux
Family Plans Aren't Just For Families
It’s no secret that you can save big bucks by signing up for a family plan rather than going it alone, but many cell phone users don’t take advantage of this fact because they don’t have families. Yet, as BillShrink points out, there’s nothing stipulating that you need to be related by blood to the people with whom you enter into a family plan. “Trusted friends, co-workers, neighbors and roommates can all share minutes and get the benefits of a less expensive family plan,” Satyavolu said.
Photo Credit: Pink Sherbet Photography
Secret Cell Phone Plans
While it’s generally pretty hush-hush, phone companies do sometimes offer special cell phone plans to customers, usually if they threaten to switch to a different network. Several bloggers have reported on alternative plans that were offered to them by Verizon, including an ultra-cheap $25 a month plan that gives you 100 anytime minutes and 500 night and weekend minutes. Our requests for a comment from Verizon were not returned.
We have also heard stories that T-Mobile has taken similar steps, a fact that was confirmed to us, however vaguely, by a spokesperson for the company. “T-Mobile periodically provides promotional service plans, rates and other offers designed to reward some of our more loyal customers. We do not publicly disclose the details of these promotional offers.”
The bottom line is that if you want a cheaper pricing plan, the most important step is just to ask, although you may have to bluff about wanting to leave in order to get a good offer.
Photo Credit: annikaleigh
Another option that isn’t really a secret, but is still not taken advantage of often is to sign up for a prepaid plan. With this option, you can avoid all the hassle of signing up for a contract and avoid being pigeonholed into a plan where you pay for more minutes than you need. According to Consumer Reports, even compared to the cheapest plans out there, the prepaid option can save you hundreds of dollars a year.
Photo Credit: quaziefoto
For many consumers, the idea of switching plans can feel like a monumental decision, but you also have the option to change your plan temporarily without having to commit to a new contract or provider. As MSNBC points out, this is particularly useful if you know in advance that you’re going to have a month of heavy usage, perhaps because of an upcoming family event or because you’re hunting for a new job. Rather than risk running over your minutes, you can shift to a plan with more talk time and then shift back to your old plan the following month. But as Consumer Reports points out, make sure you don’t make this switch in the middle of the month or you might end up being charged for the wrong amount of minutes.
Photo Credit: compujeramey
Early Termination Fees
While some might disagree, termination fees are not always a bad thing. If you are unhappy with your phone or your provider, it may make more sense to pay $100 to switch, rather than continue paying nearly that much every month for a service that isn’t a good fit. That said, it’s important to know what the fee is before you make your decision. A recent study from the Federal Communications Commission found that 18% of cell phone users were not aware that they could be penalized for breaking their cell phone contract early and nearly half of those who did know were unsure exactly how much they could be fined.
So before you do end your contract prematurely, find out the termination fee. Also, most carriers decrease the fee after each month you have the phone, so if you’re just a couple days away from the new month, try to hold out.
Photo Credit: NobMouse
Careful When Using Your Phone Abroad
If you are planning to use your phone abroad, you should talk with your phone company to see if they offer a temporary phone plan for making calls outside the country. According to The New York Times, Verizon offers a Global Value Plan for $5 that cuts down on roaming fees for 130 countries. AT&T and Sprint both offer similar services at comparable prices.
Besides these, it’s also worth signing up for an account with Skype and Google Voice. These services allow you to make heavily discounted international calls over the Internet.
Photo Credit: Dave Heuts
Texting has quickly become the default means of communication for many younger cell phone users, but there are plenty of horror stories about customers racking up huge texting bills. This is one case where it may pay to be safe and sign up for an unlimited texting plan. T-Mobile offers unlimited texting for just $10 a month compared to paying 20 cents for each message. Also, whether you’re texting or calling people, you should consider which network your friends and family are on and try to sign up for that one too, as it’s often free to text or call people who have the same provider as you do.
Photo Credit: ydhsu
Don't Call 411
Finally, one small thing to keep in mind is that you should never dial 411 from your cell phone. Those three little numbers can cost you big bucks. According to BillShrink, you may be charged as much as $1.25 for each 411 call. Instead, you should call 1-GOOG-411 or 1-800-FREE-411, two services that give you free directory assistance.
Photo Credit: Getty Images
Cell Phone Horror Stories
If you follow all the tips mentioned here, you should be able to cut down on the amount of money you waste on your cell phone each month, but that's only one of many hassles that come from owning a cell phone. Check out MainStreet's roundup of the worst cell phone horror stories so you know what to look out for.
Photo Credit: Katie@!
Read More: cell phones