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How to Save Big Money on Your Phone Bill

It's common for Americans to pay $70 or more for a home phone line, $50 or more for a cell phone, and even more for extra lines, voice mail, long distance and other phone "extras." And, if you don't plan carefully, an extra half-hour spent talking to your aunt in Des Moines and an hour with that customer in Alaska can add up to hundreds more each month.

Phone Bill

Over 8 million Americans have given up their landlines in favor of a "cell-phone-only" lifestyle.

Is there a "best" phone option out there to save money? Probably not, simply because we all have such varied needs when it comes to phone-calling.

However, there are many ways to cut down on your own bill so this basic necessity doesn't end up breaking the bank.

Ditch Your Landline.

Many people are opting to get rid of their home phone landlines and use a cell phone as their only phone. It is now possible to transfer your home phone number to a cell phone and, in fact, more than 8 million people in the United States have already made the transition.

Said Travis Larson, spokesperson for the Cellular Telecommunications & Internet Association in Washington, DC. "We find that normally, it's students and people under the age of 30 who cut their landlines."

The benefit to this is obvious: If you previously used both a landline and a cell phone, you cut out an entire phone bill. Plus, most all cell phone plans include long distance calls, so you don't have to worry about pricey "per-minute" rates of typical landline long-distance plans.

There are cons though. Your cell phone connection may be sketchy in some areas, and you have to watch out for extra charges for "roaming" outside of your service area, or choose a plan with no roaming charges. And, you must keep your cell phone charged at all times, which many fail to do.

There is also the issue of safety. During emergencies, such as 9/11, cell phone lines can become tied up, leaving you stranded. It's also relatively easy for cell phones to get lost, broken or stolen, leaving you -- once again -- potentially stranded.

Another major caveat: If you dial 911 from a landline, the dispatcher sees your street address and phone number. This is not so with a cell phone. Cell phone companies were required to improve their ability to provide location information in emergencies by December 31, 2005, but, says TURN (a utility reform network) research director Regina Costa, "Even when this occurs, the service will not be as fast or seamless as landline 911."

This is because some cell phone companies will provide emergency locations using a GPS location finder. However, you will likely have to purchase a new cell phone with GPS capability if you want this service.

"At its best the GPS won't be as reliable as your landline in emergencies," Costa said.

One final consideration, if you use DSL or dial-up Internet access, a landline is required (a cable modem comes through cable TV lines, and does not require a landline).

Keep Your Landline -- Ditch Long Distance.

If you opt to keep both a landline and a cell phone, consider getting rid of long distance service on your landline. Most cell phone plans include long distance, while this service will be extra (and sometimes costly) on a landline.

This way, you only pay for local use on your landline, and use your cell phone for any long distance calls.

Internet Phone Service

Phone Bill

VoIP phone service can save you significant money on your phone bill, but only if you have a broadband Ethernet connection.

VoIP (or Voice over Internet Protocol) allows you to make phone calls using your broadband Internet connection instead of a standard phone line. This service converts your call into data that travels over the Internet, like an e-mail, then comes out at the receiving number like any typical phone call.

Vonage is currently the leader in this service, but other major carriers are also developing VoIP services.

The benefit is that VoIP is significantly cheaper than landlines or cell phones, and offers services such as call-waiting, caller ID, voicemail and three- (or more) way calling for no additional charge. For $24.99 a month, for instance, Vonage offers unlimited calls to anywhere in the United States, Puerto Rico and Canada. Typical phone companies could charge three times or more for a more limited type of service.

The downside is that the service may not work during power outages and there is a similar problem with 911 calls as with cell phones. Although most VoIP providers offer "Enhanced 911" (E911), some VoIP services may not be able to always connect to a 911 dispatch center or transfer the location of callers.

You must have a broadband Ethernet connection, such as Cable or DSL, to use this service.

Seven Quick Tips to Find the Best and Lowest Cost Cell Phone Service for You

  • Tailor it to your lifestyle. If you travel often, make sure your plan has no roaming charges and competitive international rates. If you talk often, make sure you have enough minutes to cover your calls (going over the minutes in your rate plan can add up fast).

  • Consider a family plan. Most carriers offer plans to help reduce the costs of multiple phones for one family. Under one basic plan, you can add another line for a minimum charge. Be aware, though, that everyone on the plan will be sharing one "pot" of minutes.

  • Get your friends and family into one network. Most carriers offer free "mobile-to-mobile" minutes that allow customers to talk to one another without using up minutes. This can drastically cut down on the number of minutes you need to pay for, and therefore cut down your bill.

  • Find out whether your plan rounds calls to the second or the minute (is a call that lasts 2 minutes and 1 second charged as a 2-minute or 3-minute call?). Of course, a plan that rounds to the second can save you money, as your minutes will not add up as fast.

  • If you only use your phone for a finite number of minutes each month, or you just want one for an emergency, consider a prepaid plan.

  • Watch for changing rate plans and promotions. If you notice a better rate from your carrier, they will often switch you to it for no fee. (Switching to another carrier entirely is often not economical, as you may be liable for charges for breaking a one- or two-year contract.)

  • Watch out for cramming, which the Federal Communications Commission (FCC) says is the "practice of placing unauthorized, misleading, or deceptive charges on your telephone bill." This can happen with cell phones or landlines. If you notice an unusual charge on your bill (even one for only $2 or $3), call the phone company and find out what it's for.

Recommended Reading

The Easiest Ways to Opt Out of Telemarketing Calls, Junk Mail, and More

12 Tips to Lower Your Heating Bill This Winter


Landlines Get Cut: Cell Phones on the Rise

Cell Phone Number Portability

Federal Communications Commission Consumer Facts

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