Keep the services you love while saving up to $300 a year, thanks to these smart tactics.
Most of us are feeling the pinch as our cell phone bills climb higher: For an individual with a service contract, the average monthly tab is a whopping $92, reports J.D. Power and Associates, an information-services firm. While talk time is actually getting cheaper, add-on charges for text and data services — and the fact that most households now have multiple mobile lines — mean that “owning a cell phone is an increasingly large chunk of the monthly budget,” notes Linda Sherry, director of national priorities for Consumer Action, an advocacy group. But it’s a chunk you can whittle down by identifying and eliminating unnecessary (and sometimes sneaky) charges. In fact, the bill-comparison site billshrink.com estimates that the average American who has a single wireless line can save $336 a year; the key lies in finding a plan that better suits how much you talk, text, and Web surf. Here, six strategies that will help you avoid common cell phone money pits and save big on that monthly bill:
MONEY PIT #1
Shifting “Friends and Family”
When Ann Dalrymple of Boston gave in to her iPhone craving, she switched carriers but kept the same 500-minute plan that she’d been happy with for years. But then the first month’s bill arrived, for a whopping $285.37 — more than triple what she had expected. “I’d never gone over my allotted minutes before,” Dalrymple says. One big part of the sky-high charges: dozens of minutes spent with callers who still used her old carrier and had previously been free under her “friends and family” plan. Now Dalrymple had to pay for every single minute. To avoid this hitch when switching carriers, check which of your frequently dialed contacts will no longer be free as part of your “friends and family” network, and then see which plan will best suit your needs. Doing so takes just a few minutes on the phone and is cheaper than overage fees. And if you still receive a huge bill that makes you rethink your decision, know that carriers let you switch plans, often penalty-free, within your two-year contract — even mid-month.
What’s more, even those who are loyal to their carrier can learn from Dalrymple’s case of sticker shock: To make sure you don’t unwittingly go over your allotted minutes and rack up major charges, log on to your account online and set alerts so that you get a text-message or e-mail warning when you’re near your limit. Verizon Wireless subscribers, for example, can check how much they’ve used for free in their online account and set usage controls in the “Manage Verizon Safeguards” section. (There’s a $4.99 charge for the latter.)
MONEY PIT #2
“Unlimited Service” Offers
Paying for unlimited talk, text-messages, and data may seem to be the best way to dodge the surprise of an unusually high bill. Such plans are, however, quite expensive (up to $100 a month or even more) and are rarely the best fit if, say, only one or two people do the bulk of text-messaging or e-mailing, says Samir Kothari, cofounder of billshrink.com. Instead of signing up all your family’s cell phones for unlimited services, assess each person’s needs separately; you can usually add services per line as usage dictates — a more economical solution.
Tip: If you don’t opt for an unlimited plan but have chatty teens, consider parental controls, which allow you to put a cap on a line’s activity, although they usually involve a $5 to $10 monthly fee. How they work: Your teen gets a warning before he’s cut off at the limit you’ve set for talking, text-messaging, downloading, and other actions (video bumps up usage especially fast), allowing him to better manage his phone time.
MONEY PIT #3
Pricey New Plans
Beware the “free upgrade” of your phone to a newer model if you’re currently a low-tech customer. Nearly two-thirds of the cell phones carriers sell these days require an extra data plan for receiving e-mail, using apps, and surfing the Internet — easily boosting your bill by $15 to $30 a month, whether you plan to use those capabilities or not. You may just want to say no and stick with the basic model you already own.
Next: Wrong-Button Fumbles, Staying Under Contract, and Sneaky Sales
MONEY PIT #4
The difference was almost imperceptible at first, according to Alison Ilg of Marietta, GA. “Our wireless bill was a little more each month,” she says. Reviewing it line by line, Ilg discovered that her 14-year-old daughter had accidentally hit the Internet button on her phone on a few occasions while dialing, generating a 99-cent charge each time for those few seconds of data usage. Such fees can be a problem; last year, Verizon Wireless agreed to a voluntary payment of $25 million to the U.S. Treasury after similar $1.99-a-pop charges showed up on 15 million customer bills. (The carrier has also made changes to prevent the problem from recurring.)
Ilg solved her family’s overcharge problems — and you can solve yours, too — with a quick call to the carrier. She received a refund and was also able to block Internet activity on her daughter’s line.
MONEY PIT #5
Staying Under Contract
Users of prepaid cell phones pay an average of $60 per month — or $32 less than those under contract do, according to research conducted by J.D. Power and Associates. Such plans, which let you pay at the beginning of the month for the services you intend to access or for blocks of minutes to use as needed, as well as allow you to switch providers at any time, are a good fit if you’re primarily a talker or a text-messager, but not if you’re the kind of person who often surfs the Web from your smartphone, says Kothari.
But before you rip up your service agreement, consider the trade-off involved: You’ll pay more for a new phone (at press time, the cost was $195 for a Motorola Citrus smartphone on a Verizon Wireless prepaid plan, versus free with a two-year contract), and you’ll have a much slimmer selection to choose from.
MONEY PIT #6
“I figured we were using too many minutes,” says Amy Magan of Carmel, IN, whose combined landline and wireless bill kept climbing. “But when I looked at it more carefully, I saw line after line of ‘personal psychic’ charges — and each one was being billed at $2.13.” Magan’s 13-year-old daughter had clicked on an ad in a free instant-messaging program on her phone, not realizing that the psychic she’d text-messaged wasn’t advising her for free. Total psychic tab over three months: $324.50. “I wish we’d been warned that my child might be presented with the opportunity to buy these services,” says Magan.
Parents themselves need to be on the lookout not just for their spending on downloadable programs — or apps — but also for purchases made through these apps and charged to the cell phone bill, Kothari says. (Note: It’s not always your kid’s fault. Sometimes services will latch on — without authorization — when someone visits a site and will start generating charges of, say, $10 a month for a game or horoscope.) Purchase-blocking is a common component of those $5-to-$10-per-month parental controls, which may be well worth it; just be sure to keep a tight rein on the family account password, advises Kothari, so you can keep a lid on your kids’ spending.