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Monday, July 2, 2012

Saving money on cell phones

Having a cell phone is expensive. I know.

When you look at the overall costs of having the latest greatest mobile device in your pocket, the biggest expense isn't the cost of the hardware, but the service. In some countries cell phones are subsidized in exchange for a certain amount of service time. The costs of such wireless plans are typically ridiculously high, especially since these companies tack on extra "taxes" that can often be up to 30%.

Most people think that they are getting a better deal by buying the subsidized phone. Truth is, they could save substantial amounts of money with a prepaid cell phone plan, particularly if they don't use their phone very much. It's very easy to find dumbphones online for rather low prices online. They make phone calls and do SMS reasonably. Smart phones are harder to find, but they are out there. Many unlocked, no-contract phones sold in the US are imports from other countries, so they don't come with a warranty. Obviously, this is more of a concern with a $500 smartphone than a $15 dumbphone.

As for carriers, find a GSM carrier (the ones that have sim cards). You can bring any phone you want onto the network, provided that it supports the frequencies. Another advantage of GSM phones is that you can easily change carriers if you find a better deal or don't like the service. It also makes changing phones really easy since all you have to do is move the sim card. While prepaid carriers charge money for the sim card, it's usually less than $20 and there's no activation fee.

If you are already locked into a cell phone contract, paying the early termination and getting your phone unlocked (assuming you are using a GSM carrier) can still save you substantial amounts of money over the long run. Don't terminate your contract if you have a few months left, though.

Congrats! With these new strategies, you are now able to get cell phone service for much cheaper than before. Tell your friends. Avoid CDMA carriers like the plague. Pay full price for your cell phones and use prepaid plans.

Word of caution: While prepaid plans are typically cheaper, shop around. Also, if your post-paid plan is cheaper (over two years) based on your situation, don't be stupid.

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