In the 21st Century most Americans cannot live without their cell phones and rightfully so.  The cell phone is the simplest and most efficient way to always be in communication with friends and family, and it is a necessary device to have in case of emergency when traveling, driving or just performing day-to-day functions.  The problem is that the major carriers (Sprint, At&T, etc.) know this and are substantially overcharging users. 

Because only a handful of companies dominate the industry they have a monopoly and use their power to fix prices; using long-term contracts to rope you into monthly bills that can destroy your budget, and your credit.  There are things you can do to ensure that you get the best deal possible on your cell phone.  this article outlines some of those methods.

The first thing to realize when getting a cell phone is that the major expense is NOT the cell phone; it is the cost of the monthly bill. 

If you purchase a phone for $200 and sign up for a 2-year contract for $99/month you will end up spending $2,600 ($200 for the phone and $2,400 for the service).  The phone is less than 10% of your total cost and the service plan is where all the profit is made.  This is why Sprint and the others are charging such low prices for phones or just giving them away.  If you can avoid the long term contract do it. Once under contract the cell phone company can hit you with charges and fees that you are forced to pay because you are under contract.

If you are comfortable with signing up for a one or two-year contract don't go to the cell phone store without doing your research first.  If you know the prices of cell phones and the corresponding plans you can get the best deal.  One of the best ways to do the research is to use a free service called BillShrink.com.

Billshrink.com is a website that compares service costs for cell phones and they estimate that 80% of Americans overpay for their cell-phone service at an average of $300 per year, with the over payments ranging from unused minutes to termination fees.     To use the service just input your current cell phone number and password and BillShrink will return the best cell phone plans available.

Comparison of major cell phone plans from the BillShrink.com website:

Selecting the right plan that YOU choose can save you hundreds of dollars per year.

Additional Cell Phone Options

The Basic Phone - If you are a person who just wants a basic cell phone and doesn't text a lot or downloads things from the Internet you should probably skip the major carriers altogether.  There are several companies that offer basic phones with a fixed cost service of less than $45/month.  One of these companies is GreatCall that produces the Jitterbug; a $99 phone with big buttons, backlighting and 24-hour operators.  This is a great phone for seniors or anyone who doesn't use the phone often and just simply wants to make calls and simple texts without all the bells and whistles.

Pre-Paid Phones - Pre-Pay Cell Phone options allow you to have either a fixed bill (ex: $50/month at AT&T) or a pay as you go model where you buy a block of minutes and use your phone until your minutes are gone.  Most of the major carriers who offer the pre-pay option limit it to non-smartphones (no iPhones) and force you to buy a separate data plan contract.  The pre-pay option is a good deal for those who do NOT have a smartphone, just want to make phone calls and text, and do not anticipate using the phone for downloading Internet videos or music.

Pre-Paid Phone Cards - A pre-paid phone card is a card purchased from a merchant which is used to buy a certain number of calling minutes. You can buy both the phone card and a prepaid or disposable phone (think burner) from any convenience store and you're on your way to making calls. Pre-paid phone cards allow you to control your monthly phone budget but there are many problems reported with these cards to include 800 numbers being busy or not working, hidden fees and charges for calls, being charged for hangups or dropped calls, PIN numbers not working and cards that stop working even though all the minutes are not used.  A cheap solution, but not the most stable one.