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Choosing A Cell Phone Plan To Meet Your Needs And Your Budget

cellphonesFebruary 2008

Increasingly, cell phones have become a necessity for modern life. But most cell phone users aren’t happy about their service. In the latest Annual Survey of Cell Phone Service, Consumer Reports found that more than half of cell phone users were not satisfied with their service. Typical consumer complaints include poor coverage, dropped calls, early termination fees, mandatory contract extensions, locked phones, and unexpected fees. When cell phones offer many functions beyond phone calls—from text messaging to surfing the Internet to downloading videos—finding the right plan to meet your needs without breaking your budget can be a challenge. Here are some tips to help you meet that challenge.

How will you use the phone?

The most important step in finding the right phone plan for the right value is to first ask how you and your family members will use the phones and what functions you want.

  • Will the phone or phones be used for text messaging, sending and receiving email, accessing the Internet, downloading data, taking and sending pictures or some combination of these?
  • What times during the day and what days of the week will the phone be used the most?
  • Will you be making mostly local calls or will you also be making frequent long distance or international calls?
  • Will you need to use the phone outside of your normal calling area frequently?
  • Will family members use the phones to call one another?
  • What is the approximate number of minutes you’ll use per month.

Make a list of your requirements before you start to compare plans.

Don’t forget: expanded cell phone functions can inflate your bill

Advancing technology has made cell phones, particularly smartphones, very versatile tools. Adding functions beyond phone calls can lead to huge monthly bills if you don’t plan carefully. Be sure to consider these popular functions when comparing service providers and plans. The right plan can minimize the cost.

Consider the following when choosing a cell phone plan:

  • What service features do you need?
  • Text messaging plans usually are a better value than paying per message.
  • Email, Internet access, and file downloads usually need a data plan.
  • Does the provider have signal coverage in the areas in which you need service?
  • Does the "local" calling area include your most frequented locations?
  • What are the overage charges?
  • Is a contract required?
  • What is the total monthly charge including taxes and fees?

Text messaging. Paying by the message for text messaging can be very expensive if you text a lot. At ten to fifteen cents a message it doesn’t take long to run up the bill. Most service providers have text messaging plans or bundles that provide a specific number of messages—such as 400, 1000, or unlimited—for a monthly fee. Check the charge for messages over the plan limit. Note that unlimited text message plans don't cover premium services (such as downloading a third-party ringtone or responding to certain ad offers) that come from another business but are billed through your service provider.

Internet and email access. Using your phone to access the Internet, check your email, or download files of any sort (such as music, games, videos, or photos) can be costly. These functions are classified as “accessing data,” and many carriers charge a different amount for data transfers than for calls. If you use these features regularly, then sign up for a data plan. Some service providers offer combined voice and data plans. Others offer voice plans and then offer data plans as an additional service.

Future possibility of portable phones. Currently, most cell phones are locked. This means that the phone is tied to a particular service provider. If you change providers, you usually have to get a new phone. Some changes may be coming in this area. At least one major service provider has announced it will allow subscribers to keep their phones when they leave. The phone may be able to be used on another compatible network. Another major carrier has announced that by the end of 2008, subscribers will be able to use any phone with their network – without having to buy it from the service provider. Only time will tell if these announcements become reality.

Other cost-related things to consider

Family plans may seem like a good deal. Some are but some aren't. Before you sign up for a family plan, make sure that you understand how the plan works and what all the charges are for each phone. Some plans charge a separate activation and termination fee for each phone; those costs can mount up.

Prepaid plans. If you don't use most of your minutes each month with the lowest minute plan, a prepaid phone may be a better choice. With a prepaid phone, you pay by the minute and pay only for the minutes you use.

You might also consider a prepaid plan for your children. This can help control costs.

When looking for a prepaid service provider, make sure that your minutes don't expire and that the service provider doesn't charge per-day fees.

Early termination fees. These fees are among the biggest consumer complaints. They are charged when the service is cancelled before the contract ends and can range from $150 to $200. Their goal is simple: to keep you from swapping providers. Before signing up with a new service provider, ask if they pro-rate the termination fee. If the provider pro-rates the fee then the later in the contract that you cancel, the lower the fee.


Automatic contract extensions. Another top complaint, contracts have typically been automatically extended when any changes are made to service plans. Many service providers have recently announced that they will no longer automatically extend contracts with changes to service plans but automatic extensions haven't gone totally away. Some providers still use the practice. With any provider, you may trigger a contract extension if you sign up for a promotional plan or want a free or discounted phone.

Shopping for an appropriate service plan

Determining your needs and considering the various potential costs associated with cell phone service prepares you to be a savvy shopper. Here are some tips to help you find a cell phone plan that meets your needs and fits your budget.

  • Check that the provider has signal coverage in the areas in which you need service. Most providers have a coverage map on their site. You can also look on the Internet for service coverage by entering “cell phone coverage” or “cell phone coverage map” in your favorite search engine.
  • Check that the “local” calling area includes your most frequented locations such as home, work, and school.
  • What are the “peak” calling times? Some service providers have free or unlimited evenings and weekends but the definition of evening or weekend may vary between providers, so check what the unlimited times are.
  • If you plan to use your phone outside the "local" calling area, check what the roaming charges are.
  • What types of calls are included in the plan? Are there minutes for text messaging and other services? Can you rollover unused minutes?
  • If you plan to use text messaging, data downloads, internet or email access services look for plans or bundles that provide these services. Plans or bundled service can be less expensive than paying the per minute or message rate.
  • Most service providers charge an activation fee. $35 is typical. Check what the provider charges.
  • What is the per minute rate when you exceed the plan's minutes (also called “overage”)? Overage charges can be as high as forty-five cents per minute.
  • Do long distance calls cost more than local calls? If so, what are the charges?
  • If you plan to make international calls, what is the per minute charge for the locations you plan to call? Is there a monthly cost for an international plan?
  • Are there any other fees or surcharges?
  • Is a contract required? If so, do you have a choice of lengths such as a 1-year or a 2-year?
  • What is the early termination fee? If you decide to cancel before your contract term is up, is the fee pro-rated?
  • How long do you have to terminate your service without penalty after activation? Some providers have a 14 to 30 day free trial period.
  • Is the contract extended when changes are made to the plan? For example, can you change your plan—either increase or decrease your minutes—without having to extend your contract?
  • What will be the total monthly charge including taxes and fees? For example, a monthly plan advertised at $59.99 could total $70 or more with taxes and fees.

Tips for saving with your current service

Do you already have a service provider that you like? Then here are some tips that may help you save money without changing providers.

Special-caller deals. Many service providers have a plan that allows you to talk free to either other subscribers of that service or to several specific phone numbers. Some providers have plans, such as family plans, that include free calls between all the phones on the plan.

Overage charges. If you are exceeding your monthly minutes on a regular basis or temporarily, then consider upgrading your plan. Before changing the plan, ensure that making the change won't automatically extend your contract.

Under-utilization. If you are regularly well under your monthly minutes, then check for another plan that is less expensive that meets your needs. Before changing the plan, ensure that making the change won't automatically extend your contract.

Bundle options. If you are paying individually for services such as text messaging, downloads, Internet access, and email, check for bundle pricing. Bundle pricing can save money over individual prices for frequently used services.

Contract. Once your contract term is up, your service typically turns into a month-to-month agreement with no early termination fee. This may be useful if you think you might want to change service providers.

Pay full price for the phone. Instead of receiving a free or discounted phone with a one- or two-year contract, you may not have to sign up for a contract and may avoid an early termination fee.

Being a smart shopper will help you enjoy your smartphone, or just your basic plain cell phone. Look at the ways you use your phone and match a service plan to your usage to keep more money in your pocket.

For more information

Consumer Reports has a Cell Phones & Service decision guide with tips and other articles. is from Consumers Union and has tips, fact sheets and more information about communication choice including Phones & Cell Phones, Internet, TV & Radio, Cable & Satellite, and Media ownership.

Tips for Choosing a Cellular Phone Provider from the Kansas Attorney General's Office (pdf)

Reviewed and updated August 2014.

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