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How to Cut Smartphone Costs

Use these strategies to pay less for your device and wireless service.

Smartphones are convenient. I still remember the old days when I had to find a pay phone when I was away from home and needed to make a call. Now I just reach into my purse or pocket to pull out my phone not only to make a call but to check email, take a picture, listen to music, watch a video, tweet about something, and so on. But there’s a high price for that convenience.

Consumers spend, on average, more than $900 a year on cellular service, according to the U.S. Bureau of Labor Statistics. That doesn’t even include what they pay for the phones themselves, which can run $600 for the newest models.

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Fortunately, there are plenty of ways to cut the cost of owning a smartphone, says Jeff Trachsel, chief marketing officer of electronics trade-in company NextWorth. Here’s how:

Stop paying for what you’re not using. Consumers often don’t use all of the minutes, messaging and data they pay for with a wireless plan, Trachsel says. But they don’t realize it because they’re either not scrutinizing their monthly bills or don’t understand what they’re seeing on those bills. The amount of data, messaging and minutes you use should be itemized on you bill. Considering the major carriers offer unlimited minutes and messaging, your savings will likely result by cutting your data if you’re not using all of what you are allotted. My husband and I just shaved our monthly wireless bill by $25 a month -- $300 a year – by lowering our data plan. MyRatePlan.com can help you find the right mobile plan for you based on the number of minutes, messages and data you use.

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Limit data consumption. Using too much data – rather than not using all that you pay for – might be your problem. If you’re being hit with hefty overage charges each month, you might need to switch to a plan with more data, which could cost less than the fees you’re incurring. For example, a Verizon single line plan with 1 gigabyte of data costs $60 a month. However, there’s a $15 fee for each 500 megabytes of extra data you use. If you’re going over your data allotment by 500MB, you’ll break even by opting for a 2GB plan for $75 a month – and you’ll come out ahead if you’re using more than 500MB extra each month.

To avoid data overage charges, you can use an app such as the free My Data Manager to monitor your data usage and alert you when you reach certain thresholds. The app can also help you identify which other apps on your phone are consuming the most data so you can make sure they aren’t running nonstop or delete them from your phone. You also can lower data use by connecting to Wi-Fi for Web access when possible and limiting music and video streaming.

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Save with a family plan. The major wireless providers have some version of a family plan that lets you share minutes and data and can be more cost-effective than getting several individual plans, Trachsel says. For example, a Verizon family plan for four lines and 8GB of data costs $145 per month. An individual plan with 2GB of data costs $75 per month. So you’d pay twice as much if you opened four individual accounts than you would with a shared plan. So if you’re getting service through one carrier and your significant other has a different wireless provider, you might find that you could cut costs by consolidating your service with a shared plan.

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Bypass the major carriers. AT&T, Sprint, T-Mobile and Verizon aren’t the only players in the wireless field. There are smaller carriers that offer more competitive pricing than the big providers, Trachsel says. And many of them use the big carriers’ networks. That said, coverage can be an issue with smaller carriers, Trachsel says. But if you don’t travel a lot or need nationwide coverage, you can save big by going with a smaller carrier that provides coverage in the area where you spend most of your time. For example, you’ll pay just $45 per month – or $41.25 a month if you pay for a year of service upfront – for unlimited talk, text and data for 30 days with a Straight Talk Wireless prepaid plan. (The data speed slows significantly after you use up 3GB.) You’ll pay at least $15 per month more for a similar plan with AT&T, Sprint and Verizon. Visit SaveOnPhone.com for a list of carriers, the prices of their plans, coverage areas and the shortcomings of each plan. And see how opting for a prepaid, month-to-month service plan can help you save big.

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Cut the cost of a phone. If you’re upgrading to a new model, look for offers from wireless carriers that allow you to trade in your old phone for a credit to lower the price of a new phone. Note that these offers usually require a two-year contract with the carrier. So if you don’t want to be tied to a contract, you can trade in your old phone for cash at Web sites such as NextWorth, Gazelle, ecoATM and uSell.com. You also might find that you get a better price for your trade-in at these sites than the credit you would get from wireless carriers. For example, the trade-in value of an iPhone 5s with 32 GB of storage is $170 at Verizon, but NextWorth will pay $197.

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Another way to save on the cost of a phone is to opt for less storage. For example, an iPhone 6 with 16GB of storage space costs $100 less than one with 64GB. Trachsel says you can get by with less storage if you offload large files, such as photos and videos, onto your computer. With an Apple device, you can store your music in iCloud for $24.95 a year, access your songs whenever you want and free up a lot of storage space on your phone.

Weigh warranties and protection plans carefully. Given the high cost of smartphones, you might assume that paying for an extended warranty or protection plan from a wireless provider is a smart move. If you have a good track record with phones, paying $100 a year or more for extra protection might not be the best use of your money. On the other hand, if you have a habit of damaging or losing phones, an extended warranty from an independent provider, such as SquareTrade or Safeware, might be a cheaper option than a protection plan from a wireless provider. See Do You Need Insurance for Your Smart Phone? for more information.

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