Mobile Phone Contracts – How to avoid Money Traps
Choosing a Mobile phone plan and a service provider can be quite a task, especially nowadays when there are so many different mobile phone plans on offer among an endless list of service providers. So how do you confidently choose a plan that is right for you, whilst being confident you haven’t committed to years of excessive and avoidable monthly payments!
Mobile service providers offer two main types of plans being Post-paid and Prepaid Plans. There are key differences between the two, so before you engage in liaisons with a service provider to ‘talk’ your personal mobile phone service needs, it’s important to understand your circumstances and needs for a service.
Things to consider:
- Do you need a device? Or do you currently have one that will meet your requirements?
- Post-paid plans will come with a device, which is included in your monthly repayments (prepaid services generally will not include a handset). Post-paid devices are generally worth thousands of dollars and you will have to commit to at least a 24 month contact of monthly repayments in excess of $60 per month. There are 12 month options where you can opt to upgrade your plan after 12 months, however sometimes you will be required to return your device to the provider in 100% retail condition at an excessive fee (you just paid 12 months of repayments for a product you do not get to keep!) – Not a great investment! ‘Bring your own’ device plans start around the $40 per month and have great inclusions.
- What coverage do you need? Do you live remotely or perhaps do a lot of travelling?
- Providers stock certain devices that are classed as ‘rural’ which have better coverage then other devices for those who live outside the city or do a lot of traveling. However, always research online the service provider’s coverage maps for those areas that you either reside or spend a lot of time visiting. Not all providers will allow you to exit a contract just because of service issues, as they believe you have entered the contract knowing the range of service based on the availability of these maps.
- What will you be using your device for? Mostly phone calls, Emails, Video calls, Social Media purposes, Music/Video Downloads?
- Post paid plans do often have higher voice calls, data and SMS inclusions, however if you go over these inclusions you will incur excess charges.
- How often will you be using your device and will you be the only one using your device?
- Consider how often you will be using your device – perhaps a prepaid option is more suitable, you can purchase credit for your device before you use it and there can be no excess charges. Although there is generally less value in voice calls, data and SMS inclusions – this may be sufficient for you. There is no need to commit to contract for a prepaid service and you can opt out at any time. With a Post-paid service there will always be an early exit fee if you wish to exit the plan prior to the contract end date.
- Will your device be used for work purposes and if so what kind of work do you do – will your device require some kind of insurance/protective accessories?
- Be careful of ‘single price point selling’. A post-paid plan may start around the $60 per month, however the sales staff has just advised ‘based on your needs’ the contract that will best suit you will be $108 per month. They have just included – insurance on your device, the handset repayment and accessories worth up to $300. This may be fine – you perhaps do heavy labouring work and need a strong phone case and screen guard, as well as insurance in case the device falters. However, most insurance only cover standard manufacturing faults, not breakages, you will need to pay an excess to get a replacement device if the fault falls outside of the manufacturer’s warranty. The insurance you pay per month only pays for the privilege to get a ‘refurbished’ device sent to you within 2 business days, you will need to return the faulty device to the provider. Be sure to ask the sales staff for a breakdown on the monthly repayment amount.
When you enter a store, these are going to be some of the questions you will be asked for the purpose of providing you with the right product/s and in some cases upselling. Be prepared, research plans/options before you enter the store based on your needs (as above), ensure you review the coverage maps and critical information summary for the product you feel is the best fit for you and have your questions ready. If you currently have a mobile phone plan, review your current plan and understand what your history of usage has been to date. If you enter into these discussions with the sales staff without an ‘approach’ you can be sure you may be committing to services you do not need and in turn perhaps have committed to years of excessive and unnecessary payments.
Don’t be afraid to shop around and take your time to make this purchase. Generally good financial decisions are never made through impulse and ultimately the money you save on this venture can be wisely invested into your next!
Rochelle Cartwright | Assistant Office Manager | The Money Edge | Bundaberg