4 Ridiculous Things Cell Phone Companies Are Lying To You About

Is your cell phone bill as much as your car payment? If you’re like millions of Americans, it probably is. With all the talk of no-contract phones, family plans, and pay-ahead plans, we wanted to know which carrier offers consumers the most bang for their buck. Alas, it’s not as easy to keep straight as you might think because really, all cell phone companies are lying to you. Never fear: SuperMoney has you covered.

1. The Ugly Truth Behind AT&T Next, T-Mobile Jump & Verizon Edge Plans

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We looked at the AT&T’s Next plan, which is similar to T-Mobile’s Jump! And Verizon’s Edge. If you haven’t heard of it yet, here’s the deal with Next. The new AT&T plan allows you to upgrade your phone early–no more waiting until your 2-year contract is up to get the newest and coolest. In fact, the contract is ditched altogether.

What most of us are used to are 2-year contracts that subsidize the cost of your cell phone. Instead of paying $800+ for a new iPhone, we’ve paid $200 with a contract. When Apple inevitably decided to come out with an “S” version a month later, we’d have to wait out the end of our contract to get it (or pay for it out of pocket). This isn’t the case anymore.

Get savings now for a huge loss later

With AT&T Next, you pay for the service on the phone ($15 per line, currently) as well as a payment for the phone – say, $25 per month (unless you’ve brought your own). If in a year you want to upgrade, you can, but you’ll have to pay off the rest of your phone payments first. It’s a bit like leasing a car.

After a year you will have paid $480 ($25 +$15 x 12) on your cell phone. If the retail price of your phone is $500, you’re ahead of the game. But here’s the rub… You have to trade in the phone you practically just paid for. That means your cell phone carrier will reap the rewards of your old phone by refurbishing it and re-selling it to someone else. You, however, get nothing in return. Well, an early upgrade, but you won’t own that phone either. At least not really.

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And let’s say you decide not to take advantage of the upgrade right away. Maybe you decide to wait a year-and-a-half before you trade-up. ($25 + $15 x 18 months = $720) Not only will you be paying more than retail price for your new phone, you’ll be out the re-sell value of your old phone.

Something else to note, some of these deals are temporary. Our Site Editor Brenda switched her family plan to Mobile Share, and put a few of her phones on Next. While it’s saving her money now, the $15 per line charge is a special discount to draw people in to switch, and may jump to $40 the next time she wants to upgrade. Add to that the cost of the phones she might upgrade to in 2015 or 2016.

If you’re an AT&T customer, you probably logged into your account and was greeted with an awesome option to lower your bill with just a few clicks. What it doesn’t tell you is that, again, while this is a great deal now, it’s changing your plan to one that will cost you much more in the long run.

Moral of this story is, if you sign up for one of these plans, read the fine print and make sure the “savings” are worth it.

2. The Bring Your Own Phone Plan That Doesn’t Work

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So, you want to sign up for a no-contract plan? We don’t blame you. One of our SuperMoney team members went from paying $260 a month to $120 a month by going that route, but here’s the catch. You might have to buy a new phone anyways. Despite what’s being advertised with a “bring your own phone” plan, not all phones work with no-contract carriers.

“Don’t trust the ‘check your serial number’ feature on some carrier’s web sites,” said one of our writers. “They have a feature that’s supposed to give you a ‘yes’ or ‘no’ as to whether or not your phone will work on their network. We tried switching a Verizon phone and were told by technical support that, ‘oops’, their web site was wrong.”

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Before heading in to a cell phone store full of ads and sales pitches, do your research. Google your phone’s make and model and the name of the carrier you’d like to switch to, and look for current search results. Has someone else tried to lower their bill this way? With the same phone as yours? How did it work out for them?

3. Unlimited Talk, Text, and Data (Oh! We’re just kidding!)

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Really? No, not really. Most plans allow a user 2.5GB of data per month. That’s actually quite a bit and should be fine for most users, but if you like to stream videos or play Internet-based games on your phone regularly, beware. Once you exceed your 2.5GB (read: Unlimited) of data in a month, you will be lowered down to 2GB of data. This means slower internet speeds, longer download times, and you can forget streaming videos.

Mobile Hot Spots

It sounds great… Bring your Wifi with you. No need to worry about connecting to broadband, no fear of being hacked while remote-working in a cafe. You’re given a small device that you connect to, and viola – instant internet. For the most part, it works that way, but there’s just one hitch. Data limits. If you have more than one person using your mobile hot spot, you’ll quickly run out of gigabytes. Even if there’s just one user on your network, streaming videos or playing on-line games will cause you to hit the data limit pretty quickly.

Of course, there’s always the option of buying more gigabytes, but by the time you add up all the costs will you really be saving yourself money? You might be better off simply purchasing internet access through your local cable company.

These mobile hot spots work just fine if all you want to do is check email or surf Facebook. But if you want to do more than that on a regular basis, you run the risk of running out of data before the end of your billing period.

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International Calls

If you’re a business executive who travels a lot, be advised you’ll be paying more money for a service plan than your average home-body. You’ll have to call ahead and activate your international calls as well. Getting an international plan would definitely be worth the cost.

4. Pre-Paid Phones Use The Same Towers As The Bigwigs

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Most prepaid phone carriers are Mobile Virtual Network Operators (MVNO), meaning they lease cell phone towers from various cell phone providers such as Verizon, T-Mobile and others. A savvy consumer would research which towers a pre-paid plan utilizes. For instance, Straight Talk uses AT&T, T-Mobile and Verizon towers (to name a few), while GoPhone uses only the AT&T network. Make sure whichever plan you decide to go with uses towers that offer enough coverage for your area and needs.

Prepaid Phone News is a great web site that offers a wealth of information and tips on prepaid cell phone plans. And just like coupons and promo codes, you can hunt down extra minutes for your prepaid phone on sites like TracfoneRevewer.

Forewarned is forearmed

If you decide to make the jump and you experience difficulties, we’ve found the most effective way of getting answers is through Facebook. Each carrier has a customer service team ready to answer questions and point you in the right direction, without being able to finagle with your account. Your friends are also a wealth of knowledge, especially if you live in an area with only one or two carriers to choose from.

Cutting your cell phone bill nowadays isn’t as easy as cutting the cable cord, especially with carriers lying to get your business. When switching to a no-contract service or ditching your contract, research everything.

Want to improve your credit score? You first need to know where it stands now. Visit SuperMoney’s credit score search engine and find the most convenient way to check and repair your credit.

Need cash in a hurry but don’t know which personal loan company you can trust? Supermoney is here to help you find the best options for all you loan needs.

Photo: Shaheen Karolia, Phandroid, EarningMoney, Pacman.com

  • Can you tell that I hate cell phone companies? The best thing to do (if you need a smartphone) is to bank the so-called “savings” until the rose colored glasses come off, and the real charges show up.

    • Rolla Bahsous

      I’m in Canada but the cell phone companies are no better here!!! The worst is when you’re in line on the phone with the company, waiting to speak to a real human being….hours can go by!

  • I respect people who can do without a smartphone and a data plan. I know I should be putting the $120+ a month toward retirement instead of handing it over to Mr. Verizon, but… I guess there are worse addictions.

    • Right?? I don’t feel as bad about it knowing that I use my phone for work and really couldn’t do without it…

  • Max

    “Once you exceed your 2.5GB (read: Unlimited) of data in a month, you will be lowered down to 2GB of data.”

    I think you mean 2G network speeds not 2GB of data.

  • Audrey Henderson

    I finally gave up my flip phone last year when I realized that I was actually losing money (through missed emails, etc.) by not having a Smartphone. Fortunately, after 7 years with the same phone, I was entitled to a full upgrade. Still, I did consider AT&T Next but nixed the idea when I realized I would be paying full price for my phone PLUS an increased monthly bill. =:O

  • Staci Collier

    Aren’t there some math errors here in the AT&T explanation? As you stated, $15 is the line cost, that’s a service fee, and the phone itself costs $25 a month. So why then, when you’re totaling the cost of the phone itself in each example – do you include the service cost of $15? That $15 a month is what you’re paying for the line service, not the phone itself. You’re going to have a services cost no matter what – but the actual phone cost is $25. So according to my math, at 12 months you will have paid $300 against your phone and at 18 months you will have paid $450 against your phone – with the remaining costs being service fees, which you would have no matter what. Don’t get me wrong, I think these phones are ridiculously expensive, but I also know that you can plunk down money against your phone anytime you want and once the phone itself is paid for, that $25 is removed from the monthly fees if I understand it correctly. In the end, you’re going to continue paying the $15 a month for the line service – not the cost of the phone itself.