Ways to Save Money on Your Cell-Phone Bill

Is it really possible to save money on your mobile service? It is--if you know the right places to look.
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This story appears in the April 2011 issue of Entrepreneur. Subscribe »
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Laura Roeder, a social media consultant in Los Angeles, recently found a secret way to save on her cell phone service. "T-Mobile has calling plans that aren't published on their website--plans they're hesitant to tell you about," she says.

The catch? You have to pay full price for a new phone. "I paid $500 for my new smartphone instead of $200," Roeder says. "But because I'm paying $30 less for service each month, I'll make up the difference in just 10 months." Plus, it's a month-to-month plan, so she avoids the hassle of carrying a contract.

Other carriers have hidden plans, too. For $25 per month, Verizon offers 100 anytime minutes and 500 night and weekend minutes. But you won't find that plan advertised--you have to ask for it.

If digging for hidden cell phone gold sounds like too much work--or if your carrier denies these plans exist--there are other ways to cut costs. For example, most mobile service providers give discounts to certain companies or schools. Check their websites to find programs that could save you 20 percent or more on service. You might even score a deal on a new phone.

Personal finance columnist Greg Karp, author of The 1-2-3 Money Plan, says the best way to save is to make sure your contract works the way you do. "It's all about right-sizing your cell plan for what you actually use," he says.

If your plan doesn't offer enough minutes, you could pay hefty overage fees.

But it's more likely you are paying for minutes that you will never use. A study from the Citizens Utility Board in Chicago found that the average consumer pays for nearly six hours of unused minutes per month.

Avoid being among the 66 percent of cell users overpaying for service by comparing plans from competing carriers using tools like BillShrink or the Citizens Utility Board's Cellphone Saver.

And don't forget to explore prepaid options. "Many people would be better off with a pay-as-you-go prepaid cell phone," Karp says. "Prepaid phones are often the best choice for light and moderate users."

With prepaid service, you don't have a contract--you pay for your minutes before you use them. Some plans charge daily usage fees, while others charge based on how many minutes you use. If you're not a heavy phone user, the cost savings can be enormous.

Karp says prepaid phones offer other advantages: Taxes and fees are already included in the per-minute pricing. There's no contract, so there are no early-termination fees--and no credit check is required.

Still, there are downsides. Prepaid minutes expire, so be sure you understand the plan you're purchasing. Prepaid phones are older name-brand models, not the latest gadgets. And prepaid plans may have sneaky fees, so read the fine print. Some prepaid providers include TracFone, Net10, T-Mobile and Virgin Mobile.

The prepaid option is more common in other countries--only 17 percent of U.S. mobile subscribers use prepaid phones. According to a May 2010 report by the FCC, prepaid market share is 34 percent in France, 45 percent in Hong Kong, 62 percent in the U.K. and 88 percent in Italy.

What do people in those countries know that we don't?

Edition: July 2017

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