By Andrew Housser
More than half of Americans own smartphones. According to the Pew Research Center, the number of smartphone users increased 20 percent during the last two years. If those trends continue, another 25 million people will be smartphone users within the year.
Whether or not you own one of these devices, you surely know that they are loaded with features that go beyond making phone calls. You also can surf the Internet, check email, get a weather update, snap photos and take videos (and then post those to social media sites), listen to music, watch movies and more. Applications -- apps -- enable you to deposit checks, access money-saving coupons and find the lowest price on an item both online and in stores.
In other words, this high-tech gadget has the potential to help you save money. But first, it will cost you. The average data, texting and minute plan runs $2,100 for a two-year contract. That does not include taxes (which run about 15 percent) or overage charges and other fees. Tack those on, and it is easy to spend $3,400 over two years. Check out these tips for lowering your smartphone expenses.
1. Reduce your data plan. Data plans can run anywhere from $15 to $80 a month. Fear of pricey overage charges leads many people to purchase larger data plans than they really need. In 2011, most U.S. smartphone users used 150 megabytes of data per month, yet most users have data plans that provide three gigabytes -- the equivalent of 3,072 megabytes! Most carriers have apps and Web tools that help you track your data usage. My Data Manager, a free iPhone and Android app, notifies you when your data usage reaches a certain level. It also displays how much data each app uses. Track your usage for a month or two to see if you can reduce your data plan and costs.
2. Use free wireless connections. Set your phone so that it automatically reverts to using your home's wireless network (Wi-Fi) when available. Also have it search for free Wi-Fi services offered at restaurants, coffee shops, libraries, stores and other places. When your phone is connected to Wi-Fi, it is no longer tapping into your paid data plan. Free Internet connectivity does carry a risk that someone could hack into your accounts. Never do private business -- like check your bank account or use your credit card for an online purchase – unless you have a more secure connection.
3. Rein in app purchases. Smartphone users spent a collective $8 billion on apps in 2012. Up to a quarter of those apps were used only once. Read consumer reviews before you buy to make sure the app does what you need it to and is easy to use. In addition, you can sign up for notifications about temporary sales on apps via sites like DealNews and Lifehacker.
4. Talk and text for free. If you have unlimited data but limited talk minutes, Voice over Internet protocol (VoIP) apps can save on phone minutes and texting usage. The Skype app allows you to make unlimited national calls (with video if you want) for a small fee. Google Voice gives you free phone calls and text messages. This means your phone talk minutes remain untouched. Or, instead of grabbing your cell phone, take advantage of the Internet connection you probably have at home to maximize talk time with these same services.
5. Nix unnecessary features. Review your plan and bill carefully each month. Look for extra services that you are not using. For instance, you could be paying for unnecessary visual voicemail, roadside service, navigation and ring tones. Besides, there often are free apps for many of these. Opting out of these extras can add up to significant savings over the course of a two-year contract.
6. Look into prepaid plans. Check your carrier's account records to determine just how much data, voice minutes and texts you actually use. Once you have a good sense of your usage, compare costs with contract plans from major carriers, and prepaid or pay-as-you-go plans. These plans usually charge for what you use, but do not provide discounted phone costs. Still, many people find that pay-as-you-go plans can be a wise, money-saving option even if you have to pay full price for a phone.
Each of the various small fees associated with owning a smartphone might not seem big on its own. Yet when added together, they can take a significant chunk out of your income. The costs can overload an already stretched-thin budget. Consider your options carefully before signing any contract, and be a smart consumer when using any smartphone.
Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.