Thursday, March 12, 2009

You Pay Too Much For Phone Service

A shocking new study says that most cellphone and landline users overpay for their service. Not just by a little bit, mind you. They grossly overpay. How gross? How about $3 on a cell phone and up to $1 per minute on a landline?

You may think that's impossible and, anyway, YOU don't pay anywhere near that for any type of phone service. Are you sure? Have you sat down and run through the numbers lately? You may be in for an eyes-bugging-out experience.

"What do you mean by do the math ?," you say. After all, you bought into one of those all-you-can-talk bundled plans just so you never had to do any math. You get charged a flat rate per month regardless of how much you call. There is only one bill and there are never any overage surprises.

Well, you may be paying a pretty penny just to avoid some simple calculation work or the overwhelming pain of a - gasp! - phone bill that varies from month to month. Want to be absolutely sure that you're not one of those unlucky stiffs who's shelling out $3 a minute for cellular service? OK, do this. Keep a 3x5 card in your pocket for the next week to a month. Every time you're on the phone, record how many minutes elapse. If you want to be precise, keep track of seconds too. But rounded to the nearest minute will do the job nearly as well. Now, at the end of the week add up all the minutes and multiply by 4. Or just add up the minutes for a month. What's the total? Divide your cellphone bill by that number of minutes and you'll get the dollar/minute figure reasonably close.

Shocked? I'll bet you are. I'll bet if you bought a plan with too few minutes and paid the outrageous 40 cents a minute for overages that some carriers charge, you'd still be ahead. Once you know your actual usage, you can order your next service plan for not too much more than you need. If you get one with rollover minutes you'll have some cushion for the months when you spend more time on the phone. Or consider getting everyone in the family on a single shared plan. That may take some discipline if you have chatty teenagers, but for responsible adults the cost savings could be enormous.

The same comments apply to residential and home office landline service. People have become so enamored by bundled packages that they've lost track of how much they actually use long distance. In many cases you are better off getting a basic local service from your phone company and then signing up with a competitive long distance service. Yes, you'll get two bills a month but one will probably stay the same and the other will vary from zero if you don't make any long distance calls to some small number of dollars when you do. Set it up to automatically charge to your credit card and you'll eliminate the onerous effort of writing a second check each month.

Here's another point to be aware of. Traditionally, landline phone services offer unlimited incoming minutes at no extra cost. That includes long distance. It's only when you place outgoing calls that you pay for long distance minutes. You may or may not pay by the minute or the call when you place outgoing local calls. That depends on your service plan.

What about VoIP service? It makes sense for many people because they already pay for Cable broadband. With DSL, chances are you pay for a phone line anyway so you might as well use it. But even if you add a VoIP phone service to your Cable broadband, you don't necessarily need to overpay for unlimited minutes that you'll never use. has a nice 200 minute per month plan available for $9.95 per month. Packet8 will give you unlimited incoming minutes and 500 outgoing minutes for $14.99 a month. Find these plans and more at You can buy larger plans, but you could save a fortune if you just tracked your actual usage for a month and bought a plan that covers that much plus a little extra.

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