Cell Phone Plans: Which One?

How can anyone pick the right cell phone and the right service plan, given the growing number of stores selling cell phones and service plans? It's a wireless jungle out there! Here are some basic questions and answers to get you to the best choice, from CBS This Morning Money Editors Daria and Ken Dolan.

Is there one golden rule to follow when selecting a cell phone and service provider?

First, analyze what you need the cell phone for, given the lifestyle you lead. If the phone will sit in your car's glove compartment and be used only for emergencies, get a very basic plan. If you travel a lot for work, look for a plan that offers a flat rate with no roaming charges. This means that no matter where you are, every call you make will be charged as a local call.

Try the following usage test on yourself before you shop for a cell phone plan. Estimate the number of calls you'll make during a week, then multiply that number by 4 to get a monthly figure. Then multiply that number by two minutes to determine the number of minutes you'll use in a single month. Two minutes is the average cell phone call, time according to an industry association. The final number of calls and minutes you'll come up with will give you a pretty good idea what type of plan to look for when you're at the store.

Many wireless service providers offer a free phone if you sign a service contract. Is this a good deal or a come-on?

Buy the service first, and then the phone. An inexpensive or free phone that locks you into an expensive service contract is no bargain. The cost of service over a one to three year period will dwarf the initial phone cost. First-time buyers can be lured into signing on the dotted line because the word "free" is used by the sales person.
Wireless carriers typically offer two to six phones with different rate plans. Some retailers offer up to ten phone choices. Service and phone can be purchased separately, but you'll generally save $200 to $300 on the phone price if you buy it with a carrier plan.
For example: If Plan A offers a free phone but requires a one-year contract at $49 per month, the total cost is $588, or $49 per month times 12 months. If Plan B offers a $100 phone but gives equal service for $25 per month, your cost of ownership is $400. So, Plan B costs $188 less in the first year.

What about "pre-paid" cellular service? Is there any advantage to that?

The advantage to prepaid service is that you won't get a surprise in the form of a big bill at the end of the month. No matter what service plan you choose, if you go over the monthly plan limits, you're going to have to pay for it. And if there is a family emergency or you go on vacation and want to talk to the kids back home, you could set yourself up for quite a large bill.
Prepaid cellulr service costs more per minute, but when that $25 card is used up, you can't make any more calls until you buy another card. Your phone should even tell you when you're near the end of your minutes. When you buy the card, you dial in an access code written on the card and away you go.
The only way some people can get cellular service is through a prepaid service card. About 30 percent of all the people who apply for cellular service get turned down because of their credit history.

There are two types of cellular phones available now, analog and digital phones. What's the difference?

Analog phones use the same generation of technology found in VCRs and TVs. This means they can be used anywhere in the United States. More than 90 percent of the U.S. is wired for analog calling.
Digital phones use a newer technology similar to what's found in a CD player or the new high-definition TVs. Only about 70 percent of the U.S. is covered by digital service. Digital phones are much more difficult to clone than an analog phone. So you get more security with a digital phone, but the usage area may be smaller.
Some manufacturers are now offering dual phones which are analog and digital. These phones switch automatically depending on which signal is available. But there is a drawback to dual technology phones. Battery life is decreased because the analog system draws more power than the digital system.
Chances are if you're in a rural area or travel frequently, digital cellular service is not for you.

Where can I find out more about wireless phone service?

An independent company located in Bothell, Washington, can answer any cell phone question you may have. Their Web site is http://wirelessdimension.com .

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