Debt as a result of mobile phone overuse is a serious problem for many Australians who sign contracts they can't afford.
When choosing a phone, buy one that suits your needs. Don't pay hundreds for a new phone that has more features than you'll ever use if you're only going to call and SMS. Josh, Bendigo Senior Secondary College
Tips for buying a mobile phone
- Shop around - don't buy the first phone you see
- Consider a pre-paid service so you can't exceed your budget, but calls may be more expensive
- Choose a 'capped' plan that suits the amount you regularly use your phone
- Be wary of deals offering 'free' or 'cheap' mobile phones, as the actual cost of the handset is probably included in the monthly price of the contract
- If your phone is only for emergencies, buy a second-hand phone and connect to a carrier with no monthly fees
- Only sign a contract for a mobile service which covers your local area and areas where you spend time on a regular basis - ask friends and don't rely solely on coverage maps provided by carriers
Signing a contract with a phone company
- If you sign a contract, you're responsible for paying the bills, so read and understand it before signing. Mobile phone contracts are legally binding and are usually difficult and expensive to cancel before the full term has expired. You must be 18 or over to sign any kind of contract.
- Be aware that mobile phone deals may involve two separate contracts - one with the service provider and the other with a dealer for the supply of the handset
- Payment terms of contracts usually include a minimum monthly charge plus call costs. If you don't pay the bill the service provider may have the right to suspend the service whilst continuing the monthly fee.
- Sarah, Jess, Vladimir, Zoran, Osman, Eric - Northcote High School
Never sign a contract you don't understand or don't agree with.
Common debt traps
'I signed up to a contract that sounded great but I can't afford all the monthly charges.'
You have to be sure what you are committing yourself to BEFORE you sign a contract. Try pre-paid for a while to see if you can live with the phone company's service and charges before deciding on a fixed contract.
'I thought my $10 monthly plan was cheap but I got carried away with calls. My actual bill was $50!'
When you sign up for a mobile plan, the phone provider is giving you a type of credit. Like any form of credit, if it's not managed properly it can quickly turn into serious debt. Keep track of how much you use your phone to avoid any nasty surprises. Most phone companies provide a free service where you can check how much you've spent.
'I can't believe how much SMS is costing me.'
If you send five text messages a day, this will add almost $40 to your average monthly bill. Every text message you send adds up, so work out exactly how many messages you can afford to send every day.
SMS polls and competitions are often charged at higher rates, so check the costs before you vote or register.
SMS is usually charged at a flat rate per message of up to 160 characters. If your phone allows you to write a single message over 160 characters you'll get charged for an additional SMS. So an SMS with 161 characters costs twice as much as 160 characters.
'How come I'm being charged so much just for voicemail?'
Every time you listen or re-listen to messages it costs. Clear your voicemail quickly.
'I don't know how I'm going to pay this bill.'
If you need help budgeting, calculating your repayments or even understanding your obligations under a contract, contact a financial counsellor (new window).
Contact Consumer Affairs Victoria for all your rights and responsibilities related to mobile phones 1300 55 81 81 or www.consumer.vic.gov.au (new window).
Ringtones and downloads
Ringtones, wallpapers, games, music videos and other downloads are really popular. However, there are some mobile phone content providers that sign you up to an expensive subscription service when you only want to download a single game or ringtone.
If you're planning to download something, make sure you're not signing up to an expensive subscription service.
Here's a few questions to ask before you send that SMS:
- Does it support my phone handset?
- What does it cost?
- Am I signing up to a subscription service or 'club' ?
- What do I have to do to unsubscribe to stop the service?
Write down the details of the unsubscribe information and the provider's contact number. Don't subscribe or sign up to anything if you're not sure what the costs are.
If you've been ripped off, first try to sort things out with the service provider. If that doesn't work out, contact Consumer Affairs Victoria (new window) on 1300 55 81 81.
Links
Consumer Affairs Victoria - Mobile Phones
Information about buying and using mobile phones including plans and contracts, phone cards, handsets, insurance and phone safety.
