In 2020, the average American phone bill was close to $130, which is more expensive than the average cost of $110 just a few years ago. Even though this is expensive to some people, many believe that the benefits that come with the costs of both a top service provider and an impressive smartphone are worth the price.
This is because our need to be constantly connected is increasing, especially as many jobs, activities, forms of communication, safety, and security demand and depend on our phones. But does the type of phone you have affect your phone bill? Let’s find out.
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Will upgrading your phone affect your bill?
As a way to offer the latest and greatest to customers without having them have to pay the full amount up front, phone companies and wireless service providers provide options to buy new cell phones through financing that allows them to pay their smart phone off in installments.
This includes the most popular wireless providers like T-Mobile, AT&T, and Verizon, and options are available for different device types at different price points. It may seem like a good idea to get a device without paying upfront, but it’s important to keep in mind that this can increase the cost of your monthly phone bill.
We’re talking anywhere from $15 to $50 per month. This is a way for phone companies to keep you as a customer for as long as possible, and many people never actually truly pay off their phone.
Best way to pay for a cell phone
There are a few ways to go about buying a cell phone. Let’s take a look at the three most popular ways to pay for a cell phone.
Buy it outright
Buying your phone outright means that you pay for it upfront, but it also means that you’ll own your cell phone as soon as you purchase it. This means that you can do anything you want with it. Plus, you won’t have to worry about any additional payments on the phone.
Leasing your phone means you’ll pay for your phone monthly instead of paying the bill upfront. When you lease your phone, you don’t actually own it, even when you have paid the full amount according to the contract terms. Sprint’s leasing plan for example is much like leasing a car. Sprint owns the phone, but you pay the installments at a discounted price.
However, not all wireless service providers offer the option to lease. For example, AT&T does not allow people to lease a phone as an option, but they do offer what they call a Next Up plan, which allows customers to make installments and upgrade their phone every single year after only 12 months.
Make installment payments
Making installments is one of the most popular options for paying for a phone. This is because the low financial requirements of entry make it easy to get started. No money down, and 0% interest rate for three years is a very attractive offer.
Installments will be rolled into your monthly cell phone bill, and you won’t be able to sell your phone, switch providers, or make any modifications to your phone that could prevent them from reselling it until you pay it off. That being said, some cell phone providers will offer to pay off your phone entirely if you switch to their service.
Cell phone bill factors
Your monthly single payment is many times a collection of several bills rolled into one. The different options you choose for your cell phone plan, including how you purchase it and what type of phone, as well as the version of that phone, you get affect your monthly bill.
Different cell phone plan providers have different device agreements. Not all of the top providers provide the same payment plans. For example Sprint has a leasing option, and AT&T has an every year upgrade option.
That being said, most service providers have an option to pay in installments, which definitely affects your monthly bill by at least $15. And of course, if you pay for your cell phone upfront, you’ll avoid monthly bills altogether and own your phone outright.
If you are someone that is prone to or has a history of losing your cell phone, or breaking it by cracking the screen it may be a good idea to get insurance on your phone. This will add to your monthly cell phone bill, but if a problem arises, you will be able to get your cell phone fixed or a new one all together if you have an insurance plan on your phone.
One major way that your current location can affect your phone bill is if you are in an area where cell phone coverage is limited, like another country, and roaming charges start to apply. For example AT&T charges $3 per hour when your cell phone is in roaming mode.
One less commonly talked about price point for your cell phone bill is the state you live in. Your home state can indirectly affect your cell phone bill, though not as dramatically, because of the said state’s local tax rate on wireless.
In 2020, Illinois had the highest wireless tax burden by state with a rate of 22.7% while the lowest was 2.71% in Idaho.
Your wireless provider is one of the biggest factors when it comes to determining your cell phone bill. This is because different providers have different services, coverage and connectivity capabilities, levels of customer support, payment plans, and partnership.
It is possible to save a lot of money on your monthly bill by switching to a less popular phone company. For example, Mint Mobile offers phone plans for $15 per month with a decent amount of GB of data per month.
Your service plan can reflect a number of different factors on your cell phone bill like how much you pay, how much data you get each month, and what length your agreement is for. Typically, the longer length of a service plan you have, the lower you will pay each month.
Some service plans are prepaid, some include and don’t include features like a personal hotspot or BlueTooth WiFi connectivity from anywhere. Some service plans offer even more attractive features, like constant upgrades. Choosing the service plan that works for you is most important.
Taxes and surcharges
One additional cost that applies to your cell phone bill are taxes and surcharges. Both federal taxes and state taxes apply to your phone bill, and as stated previously, taxes can vary dramatically depending on which state you live in. Surcharges come in several different forms.
A surcharge can be applied if you exceed data limits, usually allotted to excessive browsing or text messaging. Other surcharges can include cost recovery charges, administrative fees, and there is even a fee for calling 911 in certain situations.
Add-ons and overages
Your service plan will usually come with either an allotted amount of data or an unlimited amount of data. Depending on your service plan, you may also want to choose to include add-ons. For example, most basic prepaid plans don’t include things like a personal hotspot. If your plan doesn’t include services like these, then you’ll have to obtain it with the help of an add-on.
When you exceed your cell phone data limit, overages might apply. Exceeding your data limit can be easy to do if you spend a lot of time browsing, gaming, or using apps like Facebook or Snapchat. Using your phone while traveling can impact your bill as well because that’s when roaming fees start to apply.
Cell phone bills can vary dramatically
People have different preferences and habits when it comes to cell phone performance and usage. Some people need a lot of data for gaming purposes, while others just need the assurance that they will be able to connect to the internet at any given moment. But other people just love having the latest and greatest cell phone!
Since there are so many different reasons for wanting a cell phone, there are many different cell phone plans, service providers, and options to meet the various needs of cell phone users. By staying informed about the factors that affect your cell phone bill, including the device that you purchase, is the best way to know what you are actually paying for.
Why is my cell phone bill so high?
Your cell phone bill might be high for a number of reasons, including your service provider, your plan, the installment payments, any surcharges, possible overage fees, costs of insurance, and your location.
How can I make my phone bill cheaper?
You can make your cell phone bill cheaper by figuring out much data you need, or would like to use each month and going from there. Consider switching to another, less expensive provider, different device payment plans, and cutting costs in add-ons or overages if possible.
Is it better to pay off your phone early?
Depending on your situation, it may be better to pay off your phone early. Doing so will mean that you own your phone outright, and therefore will be able to sell it, switch providers, or make any other modifications that you please.