7 Hidden Ways Cell Phone Providers Charge You More Money
The two-year contract is essentially dead, and carriers have replaced it with lots of confusing new ways to buy a new smartphone. From financing plans to leasing options to early upgrade contracts, each new plan adds another layer of complexity to the process of buying a smartphone and selecting a data plan. (And if you don’t want to deal with figuring out all the details, the most appealing option is to buy your new smartphone outright.) Plans have gotten complicated enough that it’s not always obvious when you’re paying too much for the service you’re getting, and there are far too many hidden ways for carriers to charge you too much when you’re buying a smartphone or choosing a data plan.
1. Adding hidden fees to your bills
Carriers have become notorious for adding unauthorized fees to your monthly bill, charging you for services that you didn’t sign up for or didn’t even receive. As the FCC reported recently, the practice, referred to as “cramming,” has affected tens of millions of American households. The agency noted, “Smartphones are sophisticated handheld devices that enable consumers to shop online from wherever they are or charge app purchases to their phone bills. The more your mobile phone bill begins to resemble a credit card bill, the more difficult it may become to spot unauthorized charges.” From service charges to voicemail fees, charges as low as a dollar or two can appear on your bill for years at a time — which means that it’s important to look at your bill each month and ensure that you recognize all the charges.
2. Convincing you to pay for more data than you need
Data charges account for a large proportion of carriers’ revenue, so many want to make sure that you’re buying an ample amount of data monthly (though they don’t mind when they get to collect overage fees, either). Carriers’ most valuable customers are those who pay more than $100 or even $200 for their service every month, including those on family plans, and companies are always willing to upgrade to you to a higher-priced data plan. But before you increase your monthly bill to get more data, check out how much data you really use each month so that you can avoid paying for lots of data that’s going to go unused.
3. Charging more than the retail price for a phone via payment plans
On plans that enable you to pay the cost of your brand-new smartphone over the space of months or years, you should always calculate the total of those monthly payments and make sure that they add up. The total cost should match the retail price of the phone; if it’s significantly more than what the phone would cost to buy up-front, then you’re paying too much for the privilege of paying for the phone gradually instead of all at once.
4. Convincing you to upgrade to a new phone every year
Early upgrade plans, particularly those with short contracts, can be a good choice if you’ve been upgrading to a new phone every year, and intend to continue doing so. But if you don’t really need a new smartphone each year, signing up for an early upgrade plan is a great way to spend a lot more money than necessary. If you really want a new phone every year, it generally works out better to purchase your phone outright and sell it to finance the purchase of the newest model. As with every plan offered by your carrier, you need to thoroughly evaluate how much it’s going to cost you in the long-term, and whether you’ll really benefit by trading in your old phone instead of reselling it yourself.
5. Keeping your bill the same even after your phone is paid off
If you plan to buy a smartphone and keep it for longer than the period of time it takes to pay off completely, then you’ll need to carefully read the terms of your agreement with your carrier. In some cases, your monthly bill will automatically decrease once you’ve paid off the retail price of your phone. But in other cases, your carrier will continue to charge you the same amount, even after you’ve had your phone long enough to pay its entire retail price. It’s one of the most annoying ways that carriers can get you to pay more than you should.
6. Not matching deals and discounts on top smartphones
While it often seems easiest to buy a smartphone directly from your carrier, it pays to investigate whether you can find the same smartphone offered at a better price elsewhere. Promotions and discounts are offered both by smartphone manufacturers themselves and by trusted retailers like Amazon, so it’s worth a quick Google search to see if there’s a better deal that your carrier isn’t matching.
7. Charging exorbitant early termination fees (and more)
Many carriers charge early termination fees when you want to switch carriers before your contract is up or your phone is paid off. Even if your carrier doesn’t charge an early termination fee, per se, you should pay attention to the terms of your service if you anticipate having to switch carriers in the near future. If you’re paying your phone off over a period of a couple of years, you’ll end up having to pay off the remainder of its price all at once if you leave your carrier early. That means that you should thoroughly investigate your carrier’s coverage and service before committing to a plan that will keep you locked in.