Put a Cork in Runaway Cell Phone Bills
- Saturday, June 25, 2005
What we suspected we now know is true: Cell phones have taken over. What was a luxury for adults as recently as a few years ago has become a must-have for most people and many families -- right down to the kids.
Even Barbie is into the act with Mattel's introduction of the new Barbie cell phone targeted at "pre-teen girls eight and older who want to act like their parents."
If cell phone bills are leaving you begging for mercy you have an out.
Prepaid cell-phone service is a simple concept, a lot like a prepaid phone card. You buy the cell phone (some companies are giving a free phone to get started), activate it and then pay to put minutes or "units" on your account.
As you use the phone, minutes come off your account. When you run low you pay to add more minutes. It's so simple a school child can do it.
Look Ma, no bill!
Possibly the best thing about prepaid cell-phone plans are all the "Nos":
No contracts to sign
No monthly bills
No long-term commitments
No credit checks
No age limits
No hidden fees
Two big questions
Two issues you should consider when going with prepaid cell-phones:
1. What happens to unused minutes?
2. Are there limitations on the calling area?
Unused minutes: With some plans your minutes are good for only a limited time, typically, 30 to 90 days. If you don't use them, you lose them.
Calling area: Some prepaid cell phones work in a very limited local calling area. With some plans if you are outside your local area, your phone will not allow you to make or receive calls.
Who should prepay?
Prepaid wireless makes a lot of sense for seniors, teens and kids and all others who are not heavy users or active talkers.
Across the pond
My first introduction to prepaid cell phones was last year during a trip to England. There, prepaid "mobiles" are wildly popular, particularly among the younger set.
My friends Shane and Jake in Blackpool think of minutes the way lots of kids think of candy. They use their allowances to buy sweets (candy), football stickers (soccer cards) and minutes for their mobiles-used more for texting their friends than to speak with their mum and dad.
Back at home almost all of the wireless providers offer some kind of prepaid plans now. Perhaps the place to start researching prepaid service is with your current provider, then compare with other plans. Just log onto the company's website and look for "Prepaid." But be aware, your current phone is not likely to convert to prepaid. You will need to buy (or get for free if you can) a phone that is compatible.
TracFone offers rates as low as 10 cents per minute. TracFone is the largest mobile phone provider but doesn't actually own any cell phone towers. They simply lease air time from the local cellular providers. That means your TracFone will work anywhere that cell phone service is available.
Your TracFone minutes never expire as long as you keep your phone active. There are two ways to do that:
The first is to just add more minutes to your account. Whenever you buy a standard 40, 100, 200, or 400 "unit" airtime card, your phone will automatically be extended another 60 days, up to a maximum of 120 days. There is also a one year card that costs about $95 with 150 units of air time. This is for the person who needs a phone but only in cases of emergency.
You can purchase pay-as-you-go phones from TracFone Wireless at Target, Sam's Club, Rite Aid, Amazon.com, Lowe's, Walgreens and other retailers.
Go to www.tracfone.com for current offers and more detailed information.
Virgin Mobile offers an interesting prepaid cell-phone plan with minutes that do not expire. My only caution is that the service may be spotty in rural areas. Read the details of Virgin's prepaid plan at www.virginmobileusa.com.
Stop into any 7-Eleven convenience market and you'll see spinner racks with prepaid phones from providers like Cingular, T-Mobile, AT&T and Virgin Mobile.
Not a bad idea
Should you dump your current plan in favor of something in a lovely pay-as-you-go model? It depends on your needs.
If you are an active talker, prepaid is a very expensive way to go. Even though prepaid customers spend less on average per month than their postpaid friends they pay more per minute.
While pricing varies from one provider to the next and according to how many minutes you buy at a time, pay-as-you-go costs on average between 10 and 50 cents a minute. Ditto for text messaging. And minutes can expire, usually after 90 days.
If you have spotty credit prepaid is certainly an attractive alternative and something you may want to consider.
All things considered, if you can keep to the terms of a contract without going over your allotted time and you do not rack up roaming charges, commitment may be cheaper than pay-as-you go.
© 2005 The Cheapskate Monthly. All rights reserved. Used with permission.
"The Cheapskate Monthly" was founded in 1992 by Mary Hunt. What began as a newsletter to encourage and empower people to break free from the bondage of consumer debt has grown into a huge community of ordinary people who have achieved remarkable success in their quest to effectively manage their money and stay out of debt. Today, "The Cheapskate Monthly" is read by close to 100,000 Cheapskates. Click here to subscribe.
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