If your cellphone plan costs a lot more than you expected, consider prepaid service
Marty Focazio knew his cellphone calls cost a lot, but it was still a bit of a shock when he did the math.
Using a spreadsheet to tally up the total monthly charges, including taxes, for all his voice minutes and text messages, he discovered he was paying as much as 42 cents each for his 400 to 500 minutes a month.
"You see the ad that says $59 a month, but then you add it up and you realize . . . my phone bill is $120 a month!" and sometimes much higher, said Focazio, of Upper Black Eddy, Pa.
So he turned in his smart phone and got a prepaid model from TracFone without all the bells and whistles. He has spent $160 total on it in the five months since.
"It's nice to just have an extra 50 or 100 bucks a month," said Focazio, 44.
Prepaid phones, with a set number of minutes, are becoming more appealing as careful budgeting becomes paramount in a tight economy.
Users can cut their spending significantly - particularly those who talk 300 minutes or less a month, says the nonprofit Telecommunications Research and Action Center.
That, of course, is precisely why service providers prefer long-term contracts. Most don't advertise prepaid plans widely. But all major carriers offer prepaid phone plans.
The number of US prepaid wireless subscribers is estimated to have grown by 19 percent as the economy slowed last year. This year, the number of users is expected to rise another 13 percent, compared with just 3 percent for contract subscribers, according to Yankee Group, a Boston research firm.
"Certainly with the economy being what it is, prepaid is resonating even more," said Jayne Wallace, spokeswoman for Virgin Mobile USA, which sells prepaid phones.
According to the New Millennium Research Council, a nonpartisan think tank, many people wrongly assume that switching to prepaid always incurs expensive contract-termination fees. Others figure they'd have to change cellphone numbers, which isn't generally the case. Or they simply don't know what prepaid is all about.
The basics: You buy a phone for anywhere from $10 to $200 and then pay for use in advance, based on the carrier's specified rates for each minute of talk or text message. You can replenish your minutes when you run low or wait till the phone goes dead when they're used up.
Plan options differ. While the snazziest phones such as Apple's iPhone generally aren't available under prepaid, you can still find models that take pictures, play music, offer e-mail, or provide Web access if you pay a higher initial cost.
But fees can still trap the unsuspecting prepaid user. Some plans charge a daily fee whenever the phone is used. Others may deduct text messaging and Web access from the minutes.
Dave Carpenter is an Associated Press personal finance writer. 
