Cell Phones

Unexpected Charges in Cell Phone Contracts

From taxes to exorbitant fees for International calls and roaming, cell phone bills never seem to be quite what you signed up for.

How to figure out what’s on your Cell Phone Bill

Have you ever gotten your cell phone bill and wondered why it was so much more than you expected? Having a cell phone plan often comes with a long list of hidden costs. Carriers like AT&T and Verizon often advertise a price but what you pay could be a lot higher.

There could be things that you can’t change like taxes and surcharges. There are also things you can control like staying within your phone plan’s data, talk and text limits so that you don’t get charged overage fees.

Here are a few hidden costs in cell phone contracts to look out for that when left unchecked, can cause quite the Bill Shock.

Taxes and Surcharges

Taxes are an unavoidable part of your cell phone bill. Service providers in other countries often include taxes and in their quoted price but that’s rare to see in the US (T-Mobile includes taxes and fees on some of their plans). According to CNN and the Tax Foundation, the average American pays 17.2% extra in surcharges and taxes on top of their plan’s rate.

Most of these charges are state and local taxes that vary widely based on where you live. For example, Oregon has the lowest rate, while Nebraska and New York customers are more likely to find themselves with a lengthy list of additional charges.

If you’re trying to figure out what your total bill should be, a quick look at Verizon’s Customer Agreement (contract) provides only a basic disclaimer about taxes and surcharges. With a little more digging, you might uncover a few more specifics under a separate document called ‘Important Plan Information’:

The market you’re in determines taxes, surcharges and fees, such as E911 and gross receipt charges. As of July 1, 2020, they can add between 10% and 42% to your standard monthly access and other charges (excludes 5G Home). As of October 1, 2020, monthly Federal Universal Service (27.10% of the interstate and international telecom charges; varies quarterly based on FCC rate), Regulatory (21 cents per voice line, 2 cents per data only line) and Administrative ($1.95 per voice line, 6 cents per data only line) charges are Verizon Wireless charges, not taxes, and are subject to change. For more details on these charges, call 1-888-684-1888.

Subscriptions and Add-ons

We’ve all been there — you get offered something for free, so you signup. The problem with these add-on deals on your service plan, like free subscriptions or bonus data, is that the providers may start charging after an intial period without you noticing. Be wary of what you sign up for and keep tabs on your kids’ subscriptions. They may think that a game or service they download on their phone is free, but your bill might start racking up charges after a while. Most service providers allow you to manage or block apps/downloads on your phone lines through a setting or by calling them.

Data, Calls and and Texts

How how much you use your phone and what you do with it impacts what your monthly bill will be. Be careful of going over data, call or text limits or calling numbers that are not covered in your plan, like international numbers. Service providers can charge varying rates, some of which can be very costly.

While many plans are now advertised as “unlimited”, each of the major carriers have long sections in their contracts detailing how they calculate usage and overage rates for a wide variety of things:

You can adjust the settings on your phone. To limit your data use, turn off the option for apps and videos to download without WiFi. You can also stop apps from using data when you’re not actively in the app.

Keep an eye on your data usage across all of your phone lines by setting up notifications when you are close to running out for the month. You can download your service provider’s app to keep track of your use as well.

Traveling Abroad

Using your phone for calls and data while you are in another country can be very expensive. It is worth considering whether to add an international plan from your service provider before traveling as even keeping your phone powered on can be tricky. As T-Mobile’s standard International Rates and Roaming Charges state, while in another country, you may charged even if a phone call goes straight to voicemail!

Alternatively, you might be able to use cell service provided by a local carrier in the country you are visiting by getting a temporary SIM card. But be careful, if you bought your phone from Verizon/T-Mobile/AT&T, it may be locked so that it can only be used on their network. You will need to ask your provider to Unlock your Phone but they will only do that if you meet certain criteria.

In the end, if you just need to make a few calls while abroad and have access to WiFi, you can use services like Skype, Facebook Messenger, WhatsApp, etc. to make calls over WiFi instead of a cellular network.

Illegal Charges

For years, service providers were known to use ‘Cramming and Slamming’ tactics to slip in extra charges onto consumers’ bills without ever telling them. These issues have been heavily regulated in recent years and are illegal today.

Though it’s rare these days to deal with cramming and slamming with any of the major carriers operating in the US, it’s worth at least keeping one eye open if your service is through one of the lesser known or newer providers.

At SimpleTerms, we know it can be hard to keep track of all of these little gotchas on your cellphone plan and contract. In fact, all contracts can be hard to understand. Studies show that 91% of Americans agree to a deal without actually understanding it. That’s why we created the SimpleTerms App – to give you a quick and easy way to pull out the information you need from your cellphone contract or any contract so you know what you’re being charged for.

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