Home > Personal Finance > A Cellphone Gotcha That Can Wreck Christmas

Comments 0 Comments

Buying a cellphone today means buying data. That’s not easy: consumers must make judgments about how reliable the data service is where they will most likely use it, and on how much data they will use. For the most part, consumers are woefully under-informed on those two critical criteria. Before you go out and get a smartphone for your kids or yourself this Christmas, make sure you understand the complete price tag on your purchase.

Because service can vary city by city, and even block by block, there’s really only one way to know if a cellphone’s data service will work for you – ask a friend who lives and works near you. But there are some ways to rough out how much data you have to buy, thanks to charts like the one below, from the Citizens Utility Board of Illinois.

Citizens Utility Board of Illinois

Citizens Utility Board of Illinois

If this chart seems overwhelming, here’s a simpler set of guidelines.

What Kind of Data User Are You?

Some of you don’t use data at all. A minority of Americans — 35%, according to Pew — still have “dumb” or “feature” phones. That crowd is best served by simple prepaid plans. There are plenty: Here’s a nice chart, courtesy of Best Buy. If you want to stay traditional, the top carriers all have $40-$50 monthly call-and-text plans.

For the rest of you, I think it’s helpful to put yourself in one of three categories: light, medium or heavy data user. I’m not suggesting this is foolproof: most folks move from less to more, as they discover apps that they can’t resist (mine is my SlingBox — I have to watch my hockey games away from home!). But it’s a start.

Light users who promise to never watch video on their phones can get away with 1 or 2 GB. Medium users who might watch one or two TV shows or games per month, or download a lot of emails with attachments, need about 5 GB. I (and my hockey games), and my frequent use of tethering to get my laptop online, need 10 GB. Beyond that, you should really use Wi-Fi more often.

Once you’ve selected a category, you’ll have a much easier time selecting a plan.

The Big 4: Best for Data Hogs

  • T-Mobile has the cheapest data-hoarder plans of the large carriers. For $70 (plus fees) you get unlimited phone surfing, and you can tether (capped at 2.5 GB). For $60 (plus fees), you get 2.5 GB on the phone. For either price, you’ll also have to buy a phone or finance one for $100-$200 upfront and another $20-$30 monthly.
  • Verizon, which tends to have the best coverage, has the most expensive plan. You can’t really get a working Verizon smartphone plan for under $100 monthly. All Verizon smartphones now require a poorly-named “share-everything” plan, even if you are sharing the data only with yourself. The Verizon guys charge $40 per device, and $60 for 2 GB, for a total of $100 (plus fees). A 10 GB plan and phone costs $140.
  • AT&T’s plans are a pinch cheaper than Verizon’s. For example, a 2 GB plan costs $45 for the phone and $50 for data, or $95 total (plus taxes). A 10 GB plan costs $30 for the device plus $100 for data, or $130.
  • Sprint was the cheapest service until T-Mobile began offering a new set of plans. Sprint gets credit for simpler pricing models. Unlimited data costs $80, and you can add 5 GB of tethering for a total of $110.

(Note: These terms are subject to change.)

Alternative Carriers

If you have done your time with one of the big four, you are out of your contract, and you now own a 4G phone you like, you are in luck. You can “bring your own device” to smaller carriers like Straight Talk, sold at Walmart, and probably cut your bill in half. T-Mobile offers a competitive BYOD plan, too. Most 4G smartphones are good enough for most consumers to read email on the go, browse the Web and use basic apps. No need to get a fancy new gadget and get stuck in another long contract. Once you’ve finished paying your contract dues, you are a free agent. Stay that way. Go month to month with a smaller carrier.

Non-contract carriers – also known as prepaid carriers, or in the industry as MVNOs, or mobile virtual network operators – are also a good option for low data users. Some have plans as low as $30 per month for a drizzle of data use. If you only plan to use your smartphone for the bare minimum, such as an emergency email here or there, the Big 4 don’t really want to deal with you.  Even if you have to buy a cheap 4G smartphone, carriers like Net 10 or Virgin Wireless offer real value at lower usage levels.

But note: These alternative carriers all ride along the networks owned by the big four, so the service is only as good as the coverage in your area. Also, while you will see ads hawking “unlimited service,” these can be confusing: Straight Talk, for example, throttles users down to painful 2G speeds if they use more than 2.5 GB in a month.

Image: petrunjela

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team