For many people, a monthly cell phone bill can easily run over $100 dollars. Even with family plans, cell phone bills can average out to $60 per line. The following guide shows several simple tips to slash a cell phone bill, while still retaining quality service. It’s possible to have great cell phone service for less than $50 a month, including unlimited text, talk, and messaging.
The Downsides of Free Phones
Modern smart phones usually cost several hundred dollars, ranging from $300-$700 in price. Several models come with dual-core processors, GPS sensors, motion sensors, and a myriad of other features. However, they are often for sale at reduced prices with a one or two year contract. It’s possible to buy an expensive smartphone for only a few dollars, with a minimal activation fee. While these phones may seem free, consumers end up paying dearly for them through higher monthly bills: a cell phone user may receive a free smart phone, only to pay $2400 over two years in $100 monthly bills. Cell phone companies subsidize the cost of modern smart phones through higher monthly bills. A common marketing tactic used by companies is ‘loss aversion’– consumers are more likely to avoid a large upfront cost than repeat smaller costs. It’s much less painful for a consumer to spend $100 for several years, than $600 all at one time
The Upside of Prepaid Cell Phones
For many years, prepaid cell phone companies have had a negative stigma. Prepaid phones were often used by people with a poor credit rating or low income. Many early prepaid cell phone companies offered a limited range of cell phones for consumers, often low quality, out of date models. Many prepaid cell phone companies now offer a variety of modern smart phones. In addition, some prepaid companies allow consumers to BYOD, or Bring Your Own Device. A customer can purchase an unlocked cell phone, and bring it to a prepaid cell company’s network. Many prepaid cell phone companies use the same cell architecture as larger companies. Many companies that own cell phone towers rent out their towers to prepaid companies. A prepaid company, also known as a Mobile Virtual Network Operator, piggybacks off companies like AT&T, T-Mobile, US-Cellular, Sprint and Verizon. Many MVNOs offer the same level of call reliability and quality at a lower monthly price.
GSM vs CDMA
There are 2 main types of cell phone technology used in the United States: GSM and CDMA. A GSM phone comes with a sim card, and operates off networks like AT&T and US Cellular. A CDMA phone doesn’t use a sim card, and is used by companies like Verizon and Sprint. When choosing a prepaid cell phone company, find out what type of cell phone technology they use, and if they allow customers to use their own devices on the network.
Many prepaid GSM phones use sim cards that can be easily transferred between phones. Many prepaid cell phone service plans can also help people save on service fees and taxes. A contract cell phone service can incur $15-$20 a month in added fees, while a prepaid plan includes all these in the initial cost. There are a few downsides to prepaid plans. Many prepaid service providers offer poor technical support, and require a high upfront cost for smart phones. If these downsides aren’t a problem, a prepaid service plan can be a great way for cell phone users to cut their bill in half.
Megan Johnson writes about technology, saving money & home insurance quotes.