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Savings Quick Tips: Pay Less for Your Landline

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Getting your spending right on your home phone service isn't difficult, but you must regularly match what you use compared with what's offered in the fast-changing telecommunications marketplace. The good news is you can almost certainly cut your telecom spending if you know a few basic strategies.

American households that use landline local and long-distance phone services spend an average of $50 a month, or $600 a year, according to market-research firm TNS Telecoms.

The basic concept behind not overpaying for home phone service is to avoid wasting money by paying for services you don't use or overbuying on services that you do use. Here's how to avoid that:

  • Choose a long-distance plan. Whatever you do, don't remain on the phone company's default long-distance plan. It's the most expensive way to make out-of-town calls. First, call your current long-distance carrier and ask what plan is right for your calling patterns. Or go to its Web site for information on plan choices. Then compare those plans to other long-distance offerings. Call quality is mostly the same no matter which long-distance company you choose, so it makes sense to shop by price. You should be able to tailor your long-distance service to fit your calling habits. That's easiest to do at such Web sites as ABTolls.com, TRAC.org, MyRatePlan.com, WhiteFence.com, PhoneRateFinder.com, CheapTelephoneBills.com, and Save-OnPhone.com.
  • Beware the bundle. Bundles of services are wildly popular among phone and cable companies. But the industry secret is that these "money-saving" bundles, which often include unlimited long-distance service, are likely to cost you more money than if you bought services a la carte from different providers. Although paying one bill each month is more convenient, it's worth comparing prices to determine just how much extra you're paying for that simplicity. For example, if you pay $13 a month for unlimited interstate long-distance service and only make an hour's worth of long-distance calls, you're paying about 22 cents per minute. Meanwhile, the best rates for long-distance service are less than a nickel a minute, including fees, for one hour of talking. So, the unlimited plan is quadruple the price or more than $10 a month extra in this example. Put another way, the bundle doesn't beat the best a la carte long-distance plans until you make about eight hours of long-distance calls every month. As a more general rule, if you make less than five hours a month of long-distance calls, skip the bundle. Instead, go to the comparison Web sites mentioned previously and seek a low-cost long-distance provider.
  • Use wireless only. Many more people today are reducing landline costs by canceling it. Instead, they use a mobile phone for all local and long-distance calls. This isn't a strategy for everyone, but it's especially good for single people who aren't home often. And it avoids hassles of divvying up the phone bill with roommates. Obviously, it's not a good idea for people who use their telephone line for Internet access or home security systems. And make sure you have good wireless phone reception in your home before you cut the cord. A less radical plan is to cancel your long-distance service only and use the mobile phone for long-distance calls, which most plans include for no additional charge. Make sure you have enough "anytime" minutes to avoid expensive per-minute charges.

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From Living Rich by Spending Smart Copyright © 2008, FT Press. Used by permission of FT Press, and Pearson Education. All rights reserved.

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