8/20/2012 2:15 PM ET|
Stay wired without staying broke
Whether it's your cell phone, pay TV or Internet service, being connected costs, and you could be paying too much. The right strategies can reduce excessive charges.
Staying connected -- with each other and the world -- costs more than ever.
We're spending steadily more on phone service, even as many people drop land lines and switch to cellphones and Voice over Internet Protocol, or VoIP. The average digital cable TV subscriber now pays $75 a month. The cost for decent broadband Internet service is likely to rise as providers institute caps to limit data access -- and charge for overages.
The costs of all these connections can easily approach $200 a month for a typical family and exceed $300 for those who choose premium services.
Here are some strategies for making sure you're not paying more than you need to:
Cable and satellite subscriptions are set up to soak you.
Sure, you'll get a great rate -- at first. A few months later, though, part of your deal will expire, and you'll start paying more. A few months after that, your bill will jump again as the rest of your deal expires.
Pay-TV providers offer those great deals upfront because most people will continue to pay the bill as it rises, said Bob Sullivan, MSNBC's Red Tape columnist and the author of "Stop Getting Ripped Off."
"They count on our laziness," Sullivan said. "They know we hate little things about change, what economists call switching costs, like losing track of where our favorite programs are on the dial. Is ESPN 206 or 35? . . . Even the most vigilant among us let it go for a few months before we complain. All this is baked into their business model."
TV providers also salt your bill with other fees and charges you may not need to pay, such as:
Boxes you don't need. If you have an HD-ready set, you don't need an HD converter box, but your television provider might not tell you that. You also don't have to lease the service's digital video recorders -- you can buy your own, although you may still have to pay a service fee, which could offset the savings.
Installation charges. These are usually waived when you sign up for new service, but keep an eye on your bill, because the charge could sneak in later. A month after our U-verse bundle was torturously installed, not one but two charges for "installation of AT&T U-verse Voice" popped up on our bill, totaling $174. I was on the phone instantly (I had the customer-service number memorized by this point) and got credits to offset the charges.
Early-termination fees. Some providers, including DirecTV, are taking a page from cellphone companies and instituting whopping early-termination fees if you discontinue service. The providers say the fees are necessary to compensate them for the high costs of installing pricey equipment, but they can come as a huge shock to subscribers who didn't realize they were under contract.
One of my readers who lost her job canceled her DirecTV service to save money, only to face a bill of more than $300 because she was only a few months into a two-year service agreement. Others have faced fees after their equipment was destroyed in fires, tornadoes, floods or other disasters.
Your strategy: Carefully review your bill every few months. Compare what you're paying to what competitors, and your own provider, are advertising for new subscribers. Call and ask the provider to match the lower price. The good news is that television service is a competitive business now, and discounts are yours for the asking.
"I have actually put Post-it notes near my TV that let me know when my discount rate is about to expire," Sullivan said. "Then, when the date arrives and my bill is about to jump from $30 to $60, I call and threaten to switch. That usually gets the bill back down to $30 for another three months. Total savings: $180 for about 30 minutes' work. Anyone who can afford to turn down a $360-an-hour job right now, please raise your hand."
Before signing up for new service, carefully review all contracts and agreements for the "escape" clause, including how to cancel service and whether that cancellation would cost you. Talking your way out of early-termination fees can be tough, so the best strategy may be to avoid them by not signing up for service or upgrades that include them.
Or you could consider cutting the cord altogether. Many people are discovering they can watch all the television they want with a broadband connection and a set-top antenna to catch local broadcast stations. If you're not ready to go cold turkey, you may be able to save a small fortune by opting out of premium channels and settling for the provider's most basic level of service.
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