Zap Cell Phone and Land Line Fees
Of all the fees that cell-phone companies can sting you with, high "overage" charges often smart the most.
Of all the fees that cell-phone companies can sting you with, high "overage" charges often smart the most. The hefty penalty for using more minutes in a month than allotted by your plan ranges from 5 cents to 45 cents per minute.
In 2006, shortly after finishing graduate school at Stanford, Prashanth Ranganathan got slapped with a $246 overage fee. Incensed, Ranganathan, 29, built a computer program that monitors his cell-phone usage on his desktop.
The program automatically tracks his minutes by linking to his account via his cell-phone provider's Web site. With his friend Aniq Rahman, Ranganathan created a Web site called Watchmycell.com. So far, more than 13,000 people have downloaded the free tool. You can also monitor your cell-phone usage by logging in to your account on your provider's Web site.
Text messages -- the bane of many a parent's existence -- can cost up to 20 cents per message to send or receive. So you (or your kids) can save by buying in bulk. T-Mobile offers 400 text messages a month for $4.99; AT&T charges $5 for 200 messages.
Switching to a cheaper plan and canceling a one- or two-year contract triggers an early-termination fee that can run as high as $200. To avoid that pain, try to transfer your service contract to someone else. For a fee of $18 to $25, Web sites such as Celltradeusa.com and Cellswapper.com help match buyers and sellers (see "Lowdown," March).
Avoid overage charges and cancellation fees altogether by purchasing prepaid service from companies such as T-Mobile, AT&T's GoPhone or Virgin Mobile. Customers can cancel their service with no penalty, and monthly rates are competitive.
For cell-phone users, the most objectionable fees -- and often the most difficult to decipher -- aren't strictly fees at all but the federal, state and local taxes that can add a staggering 6% to 23% to your monthly bill, depending on where you live (the national average is 15%). You can fight charges like these at the ballot box (sign up for legislative alerts at MyWireless.org).
At the same time, carriers pass along fees that look like taxes but aren't -- a notable example being the Universal Service Fund fee, which carriers are required to pay to promote affordable phone service. The charge varies among companies.
You can't escape fees by using a land line. Verizon, for example, charges a "dial tone" fee of $6 to $12 per month, depending on your state, to subscribers who buy basic service.
Bundling your phone with other services -- cell-phone, cable-TV and Internet-access -- can result in big savings. Or you could abandon traditional carriers altogether in favor of Internet calling services that use Voice over Internet Protocol, or VoIP, such as Vonage and AT&T CallVantage. Rates generally run about $20 per month for local calls and $25 per month for both local and long-distance service. But VoIP providers still pass along regulatory fees and charges that will add 10% to 15% to your monthly rate.
The only way to escape the extra burden is to drop your land line altogether, or go with a VoIP provider, such as Skype, that offers free service when the call is routed from one computer to another and both parties use Skype software.