Optimizing your cell phone plan

[This is a helpful guest post from Ben]

Canada has high cell phone rates compared to other G7 nations (http://www.crtc.gc.ca/eng/publications/reports/compar/compar2016.pdf; Appendix D). This is not necessarily surprising given our vast, sparsely populated country, but for those of us who live in densely populated southern Ontario it’s hard not to feel that we deserve better. I don’t have a landline phone, so my cell phone is an important utility and I have made it a mission to make it as cost efficient as possible.

All phone plan prices are tied to how much you consume; lighter users will always pay less than heavy video streamers, so the first step to having a manageable cell phone bill is to be careful with how much you use. I own a smartphone and I access the internet on it a fair amount, but most of the time I am in a WiFi area so I don’t actually use much data. If I’m outside of a WiFi area and I need to kill some time I don’t automatically reach for my phone. If I do, it is for some light browsing through Twitter or a news app which uses very little data, as opposed to YouTube or Facebook videos. In total, I might use 200 MB of data in a month. I talk even less, 20 – 60 minutes per month.

As a fairly light user, I should have my pick of reasonable phone plans, right? Unfortunately, I come down right between the talk and text (no data) plans and the heavier use 500 minutes, 1 GB data plans. I do want some data, but not too much. The best way to increase efficiency is to decrease waste, and if I have a 1 GB data plan I’m paying for a lot of data that I don’t use.

I have been a Koodo customer since I bought my first cell phone in 2010, and I’ve found them to have reasonable plans in general. They were one of the first “no contract” carriers and you can change your plan once a month if you want. This flexibility is worth a lot to me since they often have promotional plans around Christmas which are much better than the competition. This past winter, my wife and I signed up for Koodo promotional plans which offered unlimited text, 500 minutes, and 1 GB of data for $40 per month. Similar plans with other major carriers were $55+. This was a great deal and I was quite happy with it, but I was still paying for a lot of wasted minutes and data. I needed greater efficiency.

Prepay, all the way

Prepaid cell phone plans evoke memories of a simpler time, topping up minutes with cards at a gas station, hoping you don’t run out mid-call. I didn’t really know they still existed until I went searching for the cheapest phone plan. I won’t recount the entire search, but I did consider family plans, cheaper carriers such as Wind (now Freedom), even internet-based phone services. These were inadequate for various reasons. The best plan for me turned out to be Koodo’s prepaid service.

With Koodo prepaid service, you pay a set monthly fee to keep the account active. For me this is $15, which includes unlimited text/picture messaging (I actually pay $13.50 per month since you receive a 10% discount for setting up an automatic monthly top-up to your account; a no-brainer for me). Then you add your nationwide talk and data boosters. There are a variety of talk and data sizes, but you save by buying in bulk. I paid $30 for a 1 GB data booster and $25 for 500 minutes. These days, most prepaid services will make their boosters expire at the end of the month. Not Koodo. The data and minutes roll-over indefinitely (as long as you keep the account active) which means there is no waste. I bought the plan and boosters three months ago and I’ve only used half of my minutes and half of my data. Let’s break down my cost savings since I’ve switched to this prepaid plan, and estimated savings if I assume the same rate of minutes and data use.

Plan Monthly promo plan Prepaid plan Savings
Three months cost $120.00 $95.50 $24.50
Monthly cost $40.00 $31.83 $8.17
Estimated 6 months cost $240.00 $136.00 $104.00
New monthly cost $40.00 $22.67 $17.33

I’ve already saved quite a bit of money and I’m due to save quite a bit more if I maintain a fairly low level of consumption. The best part of this plan for me is that it is flexible to changing needs. People tend to pick cell phone plans based on a worst-case scenario. Maybe they don’t think they need 500 minutes a month, but what if one month they do need it? Better to have it than to pay ridiculous overage fees on a 200 minute plan. If I need to talk a lot one month it’s ok, I can just buy extra minutes. I’ll recoup the savings next month when my needs decrease.

Another benefit is Koodo’s US boosters for talk, text, and data. I travel to the US a couple times a year. Not enough to have a Canada/US plan, but there are times I wish I could use my phone there without incurring ludicrous roaming charges. The Koodo prepaid plan offers non-expiring boosters for the US which are perfect for the occasional trip.

All booster purchases can be made conveniently online. No need to hit up the Petro-Can. Once I have a good idea of my usage, I may start buying my minutes and data upfront once a year since they never expire. This is only moderately less convenient than having a monthly plan and the cost savings make up for it many times over.

I encourage you to consider your own cell phone usage and do some research to determine if you are getting the most bag for your buck. It’s too easy to sign a two-year contract and forget about it. If you own your phone and are contract free, you have a great opportunity to save some money.

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