Cell Phones: You’re Probably Paying Too Much for a Plan You Don’t Need

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By one estimate, 70% of cell phone users are “way oversubscribed,” meaning that they’re paying—overpaying really—for a plan with more minutes and texts than they need.

This is one of the many factoids presented in a recent WSJ story that everyone with a cell phone should read. You should especially take note if you have a family plan, an unlimited plan, or if you have a smartphone—because if any of these apply, you’re more likely to be paying more than is necessary. Among the other eye-opening stats in the story are:

The average household now pays $107 a month for cellphone service, up from $88 in 2005…

An extra $20 a month may not seem like much … Consider: Just $240 a year dropped into your retirement plan could add up to almost $20,000 over 25 years…

Many family plans offer either 700 or 1,400 minutes of weekday talk time a month—but the average family, with just over two telephone lines, uses about 735 minutes…

Isn’t it amazing that the average usage is just a bit over that lower minute limit? I’d wager that it’s not at all a coincidence.

As I’ve written before, cell phone plans are designed to increase the potential for overage charges. The charges, meanwhile, are hefty. People really hate getting hit with big charges for going over their allotted minutes or data plans. What all of these details do when combined is make the consumer more likely to opt to pay more for a plan with more or even unlimited usage. In the long run, choosing the less expensive plan and occasionally paying overage fees may cost the consumer less—but now, with a fatter plan, the consumer doesn’t have to think about usage at all. The wireless providers love the idea of getting that extra money out of the consumer every month, in the form of the pricier plan, rather than occasionally raking in extra revenues via overage charges. So what happens is they carefully calculate what it’ll take to get customers to go for the more expensive plans.

In addition to the stats, the WSJ piece has several pieces of good advice for getting the most out of your plan without overpaying. Including:

If you often barely exceed your plan threshold, see if your carrier has add-ons of, say 200 minutes, or a few hundred text messages, for $5, instead of stepping up $10 or $20 to the next tier. Schwark Satyavolu, chief executive of BillShrink Inc., which helps customers evaluate their bills, says that some carriers offer such add-ons but don’t promote them.

Sure, it’d be great if you never went over your minutes or text limits, and therefore you never had to pay extra. For a lot of people, that’s not realistic. But before you agree to pay extra every month like clockwork, it’s wise to see if you can pay extra occasionally, only when it’s absolutely necessary.

Related:
Cell Phone News: Prepaid Phones Are Hot, Actual Calls on Cell Phones Are Not

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