5 Secrets of Cell Phone Companies

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You don’t need your family and friends to tell you that cell phone companies operate under the mantra “loose lips sink ships.”

From overseas charges to hidden data plan fees, there are plenty of billing secrets that cell phone companies would like to keep hidden from customers. Until now, that is.

When you’re an industry that sells 45 million smartphones, overcharging and under-explaining is a common practice. But that’s exactly why we’ve dug up some ways that cell phone providers tack on more charges to your monthly bill, but aren’t exactly clear about warning you about them.

Data service charges are more common. Earlier in 2010, Verizon Wireless began charging non-smartphone customers a $10 (or more) monthly surcharge to subscribe to the company’s data services plan. Critics say that big cell phone carriers are charging less for traditional unlimited voice plans, but are more than making up for it with new add-ons like data service charges.

Overseas calls are getting pricier. While overseas cell coverage is improving, rates for using your phone in foreign bourses only grow more expensive. Companies like Sprint can charge up to $5.99 per minute in certain foreign countries — and you may pay even more for text messages.

There's a lack of billing transparency. Cell phone companies seem to do a lousy job of warning customers that rates are rising. According to a May survey of cell phone users by the Federal Communications Commission, 88% said “their cell phone company didn’t contact them after a sudden rate increase and 84% said their cell carrier didn’t contact them prior to a sudden increase.” But even if the cell customer wanted to opt out, the FCC survey says that would be difficult, too. Of those surveyed, 54% said “they would have to pay an early termination fee, and 18%, or about one in five cell phone users, did not know whether or not they would be charged an ETF.”

Early termination fees are on the rise. What's worse than not knowing what your early termination fee might be? Finding out it’s double the rate it was at when you signed up. AT&T recently jacked up its early termination fee to $325. And Verizon doubled its ETF from $175 to $350.

Unlimited plans have some limits. The dirty little secret about “unlimited” cell phone voice plans is that they can really limit your cash on hand. The website Billshrink.com estimates that unlimited plans are engineered so that customers buy more minutes than they’ll want — or need. BillShrink says that the average consumer pays $325 more than they actually need from their cell phone provider every year.

While sliding in bigger, under-the-radar fees is perfectly legal, that doesn’t make it right.

Unfortunately, for cell phone customers, it’s up to you to know what’s on your cell phone bill — and why — so you can more informed buying decisions.

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