Americans spend a lot to stay connected.
Last year, the average person spent $1,188, which comes out to about $99 a month, according to the latest Bureau of Labor Statistics Consumer Expenditure Survey. And when you look at Americans between the ages of 25 and 64, the average monthly spending jumps by about $15.
But it turns out that over half of Americans with unlimited cell phone plans consume less than 10 gigabytes monthly. If they switched to a plan with a data cap, they could save $268.44 a year, according to recent research from phone trade-in site ItsWorthMore. The results are based on a survey of 1,000 U.S. adults who were asked how much data they typically use in a month, how much money they spend on their wireless bill each month, and what their data plan was like.
About 41% of the survey respondents used an unlimited plan, with the average person spending about $84 a month and using about 12 GB of data, ItsWorthMore found. This is a bargain compared to the BLS estimate of $99 a year, but keep in mind this was a smaller sample size and relied on self-reported data.
Almost an equal number of respondents, 42%, were on a plan that capped their data. Those with limits spent $62.45 on their bills, or $22.37 less a month than those on unlimited, and used about 5.2 GB of data.
It pays to be a savvy data user. If you want to save some money on your phone bill, here are a few ways to get started.
Knowing how much data you burn through on a monthly basis is the first step toward lowering your bill. Whether you have an Android or an iPhone, you can look up your month-to-date usage in your phone's settings. There are also apps such as Data Usage and My Data Tracker (available for both Android and iPhone users) that can help you monitor your usage.
Once you start tracking, you may discover that you actually don't need unlimited high speed data, especially if you use under 10GB, which is what experts typically consider the tipping point to going with an unlimited plan. The average American uses about 9.2GB of cellular data per month (though younger users, ages 18 to 24, consume about 11.2GB), according to market research firm NPD Group. That's up dramatically from just a year ago when the average person used just 5.8GB.
It's definitely possible to use far less data, and save some money in the process. For example, you can cut down you data usage by connecting to Wi-Fi networks when they're available, or by avoiding data-heavy activities, such as streaming videos, downloading or uploading media. You can also turn off the option to have your apps automatically refreshing on background.
If you're really hesitant to make a big change and cap your data, consider at least changing your unlimited plan to a prepaid one if you haven't already. On a prepaid plan, you pay at the beginning of the month, prior to receiving your service, whereas with a traditional or "postpaid" plan you pay at the end of the month.
Prepaid plans typically don't charge all of the taxes and fees that you get hit with on a traditional plan. In fact, the Tax Foundation found that, in 2018, taxes, fees and surcharges made up a whopping 19% of the average customer's wireless bill.
And the plans themselves can be cheaper. AT&T and T-Mobile have prepaid unlimited plans starting at $50 per month for one line, as opposed to their basic unlimited postpaid plans that start at $70 and $60 a month, respectively. Meanwhile Verizon offers a prepaid unlimited plan for $65 a month, $5 less than its traditional basic unlimited plan. Sprint offers its prepaid services through its subsidiary Boost.
It's worth noting that prepaid plans may differ than postpaid plans, even with the same carrier. For example, there are typically fine print restrictions noting that your data speeds may be slowed during times of high usage.
The most cost-saving option is generally going to be switching to a prepaid plan with a data limit on a carrier outside the Big Four (AT&T, Sprint, T-Mobile and Verizon).
Smaller and prepaid carriers such as Cricket, Mint Mobile, Metro PCS and Visible have upped their game in recent years and several of them have become good options, especially for the price.
Many of these companies rent bandwidth on the networks owned the Big Four, so they say they can provide comparable call quality and speeds at lower prices. The networks aren't exactly the same, though. Many of these smaller carriers do note that they will slow data speeds if the network is congested. And some smaller carriers only provide local accessibility. To see the differences between the carriers, RootMetrics and OpenSignal have maps where you can compare providers' network quality.
That said, the benefits may likely outweigh these potential pain points. Cricket — which runs on AT&T's network — offers unlimited plans starting at $50 after signing up for autopay. But a 5GB plan is just $35 a month after the autopay discount. Meanwhile MetroPCS has a 10GB plan that costs just $40 a month.
If you do go over your data limit on a plan like this, your phone won't stop working. Instead, your speeds are throttled until the following month, so you can still send an email or even look up something online, but it just may be slower. Or some carriers do offer carryover data packages.
There also are a lot of newer carriers that are trying different approaches that may work for your budget. Mint Mobile offers an 8GB plan for $20 a month, although you will have to buy the service upfront in three-month or year-long increments. The company, which operates on T-Mobile's towers, focuses on "bulk pricing" to deliver discounts, but does offer a seven-day money back guarantee if you find the plan isn't want you need.
Tello allows users to build their own plan. Not a big talker? You don't have to pay for unlimited talk. For example, a single plan with unlimited texting, 300 minutes of talk and 8GB of data is $27 a month.
Keep in mind that even if you are open to switching, make sure to check your current plan. You may not be on a contract for your cell phone service but if you bought the latest iPhone or Android smartphone through your carrier, you could still be on the hook for the remaining balance. In that case, it might make sense to wait until the phone is paid off before making a move.
In an era of no contracts, it's much easier to shop around and find a plan that works for you. At the end of the day, taking some small steps to cut down your data usage and running some quick comparisons of carriers and plans can save you up to hundreds of dollars every year. Isn't that worth exploring your options for?
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