How much do cell phones really cost? Here’s one indication: The average household pays $350 annually—solely for wireless taxes and fees.
That factoid comes courtesy of a BillShrink infographic showing an autopsy of a sample cell phone bill. The graphic explains all sorts of typical charges—overages, roaming charges, Universal Service Fund (USF) fees—and lists basic tips for dealing with wireless providers and reining in monthly bills. Particular attention is paid to roaming charges, which travelers encounter when using their wireless phones outside the country. If you don’t have an international plan, making calls, sending texts, or using up data while abroad can cost a fortune. And, it’s noted:
Calls to voicemail while roaming are the same as a roaming call.
While the graphic serves as a decent primer for taming (or at least understanding) wireless bills, a Mint.com post offers some more advanced money-saving techniques for smartphone owners. The author of the post, who has an iPhone, explains that if he opted for the biggest AT&T plan (unlimited voice, unlimited SMS, 4 GB data), his monthly bill would be $135—or about $160 after taxes and fees where he lives. That’s over $1,900 annually.
Instead, he’s going with a much more limited plan (450 minutes of voice, 200MB of data, no SMS) and pays $65 a month, including taxes and fees. That’s $780 a year—a savings of over $1,100 annually compared to the bigger plan.
Simply using a smartphone less to lower one’s bill is not the most complicated, or useful, bit of advice. But the iPhone owner here—and surely many others—discovered that he wasn’t using his phone as much as he’d thought, and that, with a little effort and strategy, he could get away with paying for even less. For SMS, he uses Google Voice, which allows unlimited free texts. As for data, he checked his AT&T account and found out he’d never gone over 400MB in a month—and then challenged himself to limit it to 200MB a month, carefully monitoring usage throughout. Turns out it wasn’t that difficult to do so:
It turned out all I had to do was stop downloading podcasts over 3G and stop streaming YouTube videos on the bus. (I also turned off automatic email and calendar checking, but this helped more with battery life than data usage.)
The key to making a limited plan work is avoiding hefty unexpected charges, which are designed to be sufficiently painful and expensive enough to entice users into a pricier plan—which is great for the wireless provider (because you’re paying more every month), but possibly not so great for you (a one-time fee is cheaper than month after month of bigger bills). Many cell users would prefer to not monitor usage or think at all about overages and other charges, and the easiest, yet mostly costly, solution is to just pay for the priciest plan.
Alternately, you could actually think before using your phone. To avoid monster charges for making international calls, the Mint.com author recommends taking advantage of another Google Voice feature, in which you’ll use regular minutes and incur no extra charges:
Call Japan, and now you’re looking at $3.49/minute for AT&T and currently free for Google Voice. Sure, you can buy a monthly international plan and pay your carrier less per minute, but as long as Google Voice exists, why would you?
A GetRichSlowly post meanwhile, suggests “secret” no-contract cell phone plans as an easy means to save. Are they really secret? No. There are plenty of no-contract plans out there. But relatively few people use them, partly because opting for such a plan usually requires the consumer to pay the full—i.e., not subsidized—price for the phone.
You barely need a calculator, however, to figure out that no-contract plans often work out to be better deals. For example, the same exact T-Mobile usage plan cost $110 a month with no contract, and $140 a month with a two-year contract. And here’s the math on the subsidized/unsubsidized phones:
The phone I wanted to buy retailed at $500, but cost just $200 with a contract. (That’s a savings of $300, in case your math muscles aren’t working.) I quickly did the math: I could save $360 per year without a contract, but would have to pay $300 more for the phone. That still left me with $60 in my pocket for not having a contract, meaning no insane fees if I wanted to leave the contract or switch carriers. Plus, everything after the first year was pure “profit.”
Alternately, you could not think much at all before you purchase, forget about doing the math, and just buy the “cheaper” phone.