Doing These 3 Things? You’re Overpaying on the Phone Bill

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This post comes from partner site WhistleOut.com.

With the cost of cellphone service, life in a high-tech world can seem like a financial burden. But you don’t have to dread each month’s cellphone bill. Instead, a few easy changes can save you a lot of money.

Here are three common causes of cellular overspending:

1. Paying for phone insurance on an older phone

Opting for phone insurance adds an average of $5 to $12 to your monthly bill. In many cases, the insurance policy restrictions, high deductibles and limited replacement mean it’s not worth the extra expense, especially if you have an older phone.

Example: Let’s say you pay $10 a month for your phone insurance, which is a pretty typical cost. After two years of owning the device, you lose it. So, you make an insurance claim.

Now, you have a $200 deductible to pay, and you’ve also paid $240 in total for insurance over the past two years. At this point, you’re out-of-pocket $440. The fine print of your policy says the company will provide you with a replacement that is generally comparable to your lost device.

That means you might not get the same model or brand, and could end up with a refurbished phone rather than a new one. In other words, your replacement phone may be less valuable than the $440 you already paid out.

So, is insurance is worth it if you have a newer phone? The verdict is out, especially when you consider that the lost phone could be replaced with a used or lesser model.

Also, it may be a lot cheaper in the long run to invest in a quality phone case to prevent that cracked screen, instead of having to pay for the insurance to repair it. Also, a case helps keep a phone in good condition, which only increases the device’s resale value.

2. Paying for unlimited data if you mainly use Wi-Fi

Ads for unlimited data are everywhere, and it seems like such a carefree option — you simply get all the data you want. But if you’re like most of us and often use your phone on your home or work Wi-Fi network, you probably don’t need all that cellular data. In fact, in 2015, the average smartphone user used only about 1.4 GB of data every month, according to the Ericsson Mobility Report.

Example: Let’s say you’re on an unlimited data plan paying a typical $70 a month fee. You check your bill or My Data Manager app and see you’re only using 2GB of data a month. In this situation, switching to a 3GB plan that costs on average $30 a month would provide all the data you truly need and save you $40 a month, or $480 a year.

Most of us already pay for home internet service, which can start at around $40 a month. So, it makes even less financial sense to enroll in an unlimited plan.

3. Paying for your phone in installments rather than all at once

Even if you have an offer that lets you pay $30 a month for your new device over 24 months interest-free, it’s probably costing you in the long run.

Why? Because most likely, you’ll pay more than you need for your cellphone plan. In many cases, the best plan deals are with the prepaid carriers or mobile virtual network operators (MVNOs), which offer well-priced “bring your own device” plans.

Example: Let’s say you purchase a new iPhone from Verizon for $699. Each month, you pay $29.12 for your device on a 24-month installment plan, and $75 for an unlimited data plan.

If you paid for that phone upfront and then went to a smaller carrier like ROK Mobile that uses Verizon’s network but charges only $50 — instead of $75 — a month, you would save $25 a month on your plan, or $600 over two years. Here’s the math:

  • Verizon: Two years of payment plan for device ($699) plus two years on unlimited data plan (24 x $75 = $1,800) equals $2,499.
  • ROK Mobile: Pay for phone upfront ($699) plus two years on unlimited data plan (24 x $50 = $1,200) equals $1,899.

That $600 savings could make a healthy dent in your next phone purchase. Set aside the savings each month, and you’ll have a sustainable savings plan for your next new phone.

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