Today’s cell phones do much more than simply make and receive calls. They’re cameras, messaging devices, and Internet browsers. Today’s phone contracts also include more than just minutes. Depending on the type of phone you get, you might also be paying for messaging, data, and the privilege of moving up to a new phone in just a year. If a phone contract seems too good to be true, you might want to read the fine print to find out what’s really going on. These phone contract tips can help you avoid a surprise fee or disappointment when you switch to a new plan.
Determine What You Can Afford
Whether you have recently gotten your financial life in order or are working to reduce your debt, you don’t want to derail your budget by getting a cell phone plan that’s more than you can afford each month. Take a look at your income and expenses to figure how much you can spend monthly on your phone. Don’t forget to include the cost of the phone in that amount. While some contracts charge for the phone upfront, others, particularly ones that let you upgrade before the end of the contract, charge an additional monthly fee for the phone itself.
It’s not necessarily in your best interests to get the cheapest plan if you can afford a more costly one. Most plans have overage rates if you use more minutes or texts than the amount you signed up for. For example, suppose you purchase the $40 plan which offers 300 minutes and 300 texts. The plan charges 10 cents per minute when you go over your minutes and 20 cents per extra text. You then end up going over by 50 minutes and 100 texts one month. That means you’ll need to pay an extra $25 that month; it might have been cheaper to move up to the next plan.
Understand the Fees if You Quit
Early termination fees can really take a bite out of your budget. According to the FCC, in some cases, the fees are over $300, depending on how long you’ve had the plan and the type of phone you have. When you sign up for your contract, find out the exact date it ends and what the carrier’s rules are for early termination. Some reduce the amount of the fee every month you stick with the plan, for example.
If you absolutely have to get out of your plan and don’t want to pay a fee, you have some options. Some carriers offer to pay your early termination fees in an attempt to get your business, according to Consumer Reports. If you can find someone to take over your plan, your carrier may let you transfer the contract without charging you a fee.
Think about Going Contract-Free
If these phone contract tips have you reconsidering signing on the dotted line, there’s another way to get a cell phone. Prepaid plans don’t require a contract, which means you can change plans or upgrade your phone when you want. According to U.S. News & World Report, more people are using prepaid phones than before. Because you can jump ship at any time, you do have to pay the full price of your phone with a prepaid plan. That cost is something to factor in when you make a decision.
A phone contract is like any other financial commitment. Knowing what’s in it for you and what’s in it for the carrier will help get the most from your plan and avoid hefty fees.
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Filed Under: Financial tips and tricks
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