One consumer group that represents senior citizens says cell-phone companies’ unclear and confusing calling plans, fees, penalties and disclosures should undergo the same scrutiny that credit card companies will now face.
Knowing that Congress was going to take a hard look at credit card companies and their billing practices, The Seniors Coalition commissioned a March 2-5, 2009 survey by Opinion Research Corp. The survey polled two groups of cell phone users — 1,595 for some questions and 1,336 for other questions — and has a margin of error of +/- 3%. The survey found:
- 40 percent of Americans do not know what penalty they would pay if they canceled their cell phone service. While this confusion extends to 60 percent of consumers aged 65 or older, it also includes 46 percent of those aged 45-54 and 49 percent of those aged 55-64.
- 48 percent of cell phone consumers either already are at the end of their penalty period (7 percent) or in its last 12 months (41 percent). Depending on the cell phone company they are patronizing, many consumers can come out ahead if they switch to a better cell phone deal now and pay a small penalty for breaking a contract that has not yet expired.
- 54 percent say they use fewer minutes than they pay for every single month. Seven out of 10 Americans say they go under on their minutes every month or “nearly every month.â€
- When consumers were asked to estimate their minutes used each month, the mean was 228 minutes, including 252.5 minutes for contract-based phone users and 117.7 minutes per month for prepaid users.  According to one leading industry source, the amount of cell phone air time actually used by U.S. consumers averages a bit less than 550 minutes per month.
- Cell phones are now nearly as ubiquitous as credit cards, with 80 percent of American adults using cell phones, including 65 percent of those aged 65 and older.  Of all adults with cell phones with cell phones, 84 percent have contract-based phone service and 17 percent have prepaid phones. (The small overlap is accounted for here by people who have both types of cell phones.)
Consumers owe it to themselves to get the best deal. Here are some suggestions:
Make sure your plan fits your needs. If you consistently use fewer minutes, see if you can step down to a cheaper plan (although this may require agreeing to another two-year contract) or shop around at your carriers’ competitors for another plan. Phonedog.com and LetsTalk.com are among the many Web sites that specialize in comparing plans.
Consider a second-tier provider. Hate contracts but love a deal? Virgin Mobile and Boost Mobile both offer unlimited calling with no roaming charges and no contracts for $50 a month. These providers, along with Cricket and Metro PCS, are trying to win customers away from the big 4 (AT&T, Sprint, T-Mobile and Verizon) with better deals.
Go prepaid. Prepaid cell phones aren’t just for people with lousy credit anymore (folks with bad FICOs have trouble getting approved for typical cell carrier contracts). If you use less than 300 minutes a month, take a look at the pay-as-you-go options. This Consumer Reports post, “How to buy a prepaid cell phone,” can get you started.
Here are a few of my columns to check out:
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