Making the Right Call

A Consumers' Guide to a New Cell Phone Plan

CALPIRG Education Fund releases new cell phone shoppers’ guide offering simple tips consumers can take to save money when buying a new cell phone.

Report

Shopping for a cell phone and wireless service can be confusing and time-consuming, but it needn’t be. This cell phone shopper’s guide is designed to help consumers navigate the twists and turns of today’s cell phone market.

Before you buy:

  • Shop around. The cost of devices can vary greatly whether you buy in a brand store, at a 3rd party provider (such as Best Buy), or online. It is often cheapest to look at a phone in a store and then purchase it online.
  • Know your needs. Thinking about what services you use, and how much, before you shop will help avoid over-paying for products you don’t use. Look at previous cell phone bills and use the table below.

Ask yourself the following key questions:
1. What type of phone do I need? What type of phone do I want?
2. How many talk minutes do I normally use each month?
3. How often do I send and receive text messages?
4. What size data plan do I need to cover my data use?

Minimize your bill
To get the best deal consumers should:

  • Consider shifting from pay-per-use to prepaid packages. For example, $10 with Verizon can buy you 50 text messages per month with a pay-per-use plan. However, you can buy a $10 monthly text package in advance with Verizon and receive 1,000 text messages, paying 1? per message instead of 20?.
  • Compare pre-paid and post-paid services. If you get locked into a more expensive two year contract, a free phone isn’t worth it. If you are a light cell phone user, getting a pre-paid device can save you nearly $35 each month without the hassle of a two-year contract. That is a savings of $820 over two years!
  • Ask for a discount. Many cell phone companies provide discounts for students, members of credit unions, and to certain employers such as universities, large corporations, and public employees. Sprint offers a 24% monthly discount for eligible students, while Verizon offers a 15% discount to all military veterans. If just asking for a discount can save you $240 per year, it doesn’t pay to be shy.
  • Find true costs. Consumers can reasonably expect to pay up to $20 per month on top of advertised prices for cell phones since they do not include federal and state taxes, service fees, and other overage charges. Before entering into a contract, ask which taxes and fees apply to your contract and what the monthly base bill will look like.
  • Keep track of your monthly use, either online or on your phone, to insure that you do not go pass your pre-paid limits and incur overcharges. You can check on your plan through your carrier’s web site, through a free text message, or free phone call. There are also several smart phone applications (“Apps”) that help keep track of your cell phone use and can be set to alert them when they near preset limits. These include DataMan (Lite: Free / Pro: $1.99) for the iPhone and iPad, Stats (Ad-Supported: Free / Paid: $1.32) for Android smart phones, and Mobile Data Alerter (Free) for BlackBerry 4.2+ models.

With or Without Contract?
One of the biggest choices consumers must make when signing up for cell phone service is whether to choose a pre-paid or a post-paid (“bill me later”) plan. For many cost-conscious consumers, pre-paid plans can not only help give consumers better control of their wireless usage, but also save money overall.

Post-Paid Plans: The most common payment plan is the post-paid plan, in which the customer receives a monthly bill, detailing recurring monthly charges, overcharges for exceeding limits, third party charges for services, additional fees and taxes. Post-paid plans usually require signing onto a two-year contract with the wireless provider. Post-paid plans are provided by Verizon, AT&T, Sprint and T-Mobile.

Pre-Paid Plans: A newer pricing in which wireless providers offer wireless phones and services with no long-term contracts. The consumer pays a set fee for a monthly, daily, or pay-as-you-go package of their choice, inclusive of all taxes and fees avoiding surprises at the end of the billing cycle. Pre-paid programs are provided by Verizon, Go Phone (AT&T), Boost Mobile (Sprint), T-Mobile, and Metro PCS.

Getting a deal
Often, consumers can pay less for a cell phone or wireless service simply by asking. Wireless providers offer a variety of discounts to lure customers and sometimes have the ability to waive fees or provide special unadvertised deals on request.

  • Special offers:Always inquire about the availability of discounts, which can often result in significant monthly savings. AT&T, for example, offers a discounted “Senior Plan” available to customers 65 and older and discounts to eligible businesses, government agencies, and educational institutions.
  • Waiver of Activation Fees: CALPIRG Education Fund found that found that 1 in 10 stores surveyed were willing to waive the activation fee upon request.
  • Financing Options: Some providers offer unadvertised financing options for consumers who purchase devices up-front, spreading out the higher expense of a new cell phone.
  • Matching Best Offer: Ask providers to match or beat the best offer – either from a competitor or the company’s own on-line or in-store offerings.

Is there coverage in your area? Check out these maps before you buy:
o AT&T
o Verizon
o Sprint
o T-Mobile
o Metro PCS

Use these data calculators:
o AT&T
o Verizon
o T-Mobile