'Hidden' Fees Creep Up on Prepaid Plans

With everything getting more expensive these days, it was inevitable that some cell phone companies would find a way to charge more. Even prepaid plans, once a reliable source of lower-cost service, aren't immune from fees that mean you pay more than the flashy advertised price.

The good news: You can still find affordable phone plans that don’t bog you down with fees. Here’s what to know about phone plan fees — including where to find them (they're not really hidden, just in the fine print) and how to avoid them.

Where fees lurk on phone plans

When you shop for a phone plan, don't assume your final price will be the number you saw on ads or in big type on the website. Many — but not all — plans tack on fees and pass on taxes to customers.

If you do not see the phrase "taxes & fees included," you many end up paying some or all of these:

• Federal, state and local taxes.
• Surcharges, such as one that helps cover the cost of 911 services. 
• Recurring fees that carriers use to cover costs for infrastructure, connecting with other carriers, and complying with government regulations. 

Fees on phone bills have been more common on postpaid vs. prepaid plans, but that's changing. For example, in June one large carrier announced it will add a $2.63 Administrative & Regulatory Cost Recovery Fee to lines on its prepaid plans. Industry experts say the other big carriers are likely to follow suit, just as they did several years ago when the same type of fee hit postpaid plans.

Consumer advocates say fees are simply a way for phone companies to hide higher costs while not having to change the base price seen in ads or in big type on the website. And fees do add up: In the example above, one line will cost $31.56 extra over a year while a family with four lines would pay $126.24 extra.

Fortunately, customers have choices for fee-free phone service — and even truly free cell service.

How to avoid fees and pay less for phone service

Prepaid phone plans don’t involve a contract, so you’re free to switch phone carriers at will. And most are month-to-month (despite outliers like Mint Mobile’s multi-month pricing), so you have plenty of opportunities to shop around.

When choosing the best cell plan for your needs, look at some key things:

Look for 'fees included'

You want to see a phrase like “fees included” or "taxes & fees included" in the plan outline. On the other hand, “plus fees” is phone-company speak for “you’re going to pay more than the price we’re using to draw you in.”

Understand any promotional pricing

You may see an introductory price, such as “$20/month for the first 3 months, then $45.” Sure, you could take advantage of the promotional pricing, then switch providers when the price jumps later. But that's one more thing to remember — and overlooking it when the time comes can dent your budget.

Check out the Broadband Facts

The FCC requires fact sheets explaining mobile broadband plans on provider websites, ads, and online accounts. They look a lot like the nutritional labels on food packages.

You want to see a lot of zeros in the “Additional Charges & Terms” section. That's where carriers must show any fees, surcharges, and taxes it passes to customers. Also, check the “Monthly Price” section for intro pricing disclosures. For example, compare Mint Mobile’s fact sheet for its 3-month 20GB plan to TextNow’s 20GB monthly Unlimited Plan. As you can see, with Mint you’ll be on the hook for additional fees plus pay more per month after the intro rate:

We think TextNow is a great way to lower your phone bill and avoid fees.

How can I get truly free cell service?

TextNow's base Free Flex Plan is always $0, and gives you access to essential apps like email, finance, iHeartRadio, maps, and rideshare. Want more data? Add it by the day, week, or month at affordable rates. You can drop back to free level, whenever you want, with no service interruptions.  

Simply download the app to get started!