Cell Phone Contracts vs. You = You Lose
This week’s blog we are going to talk about what you really sign when you sign a cell phone “agreement”.
I say that as if you have noticed most if not all TV ads say they no longer have “contracts”.
So, first thing is first….
All TV ads are basically lies, or you could say, they omit many important things that would give you the full story and if you knew everything you probably would not go to that company at all. When I do a seminar and it consists of mostly college kids who have come of age (18 yrs old) I tell them you are now legally allowed to get screwed by companies whose name you put on any “agreement”.
Let’s first discuss the B.S statement of “we no longer have contracts”. Obviously a lie, as they say you will take the full price of a phone and divide it into 24 months’ worth of payments where you do not have the option to make the “monthly phone payments longer for you”.
AND, if you do not complete this and leave to go to another company you are charged a “cancellation fee”.
That sound like a “contract” to you? It should because that what a cancellation fee is used for, screwing you over to make extra money (in my opinion).
Don’t pay the fee? It then goes to a collection company who reports it on your credit file and can damage you credit report anywhere from 60-90 points.
Now that we have made that “GOTCHA” to open your eyes to this sneaky tactic clear let’s go into the next one.
“ADD Additional Lines/Family Plan”:
Have more than one person in your family? Add several family members and save money!
UNLESS you have to cancel the service then EVERY added line counts as one service so you are penalized for the following:
- The rest of your monthly fee owed on your phone (average cost $700).
- The cancellation fee of an average cost $275-350.00 (PER LINE).
- Your typical final bill (most people do not pay at average $100.00)
OVERALL money owed per line $ $700-1,000.00 PER LINE!!!!
See how quickly that can add up if you have a few lines as the original plan you had for saving money by switching?
Now imagine how angry and frustrating it would be to be told by some lender that the cell phone bill collection(which could be from $1,000-$4,000) is hurting your credit score enough for you to possibly not getting the home you want for your family or just yourself and a future family.
MORAL of the story: DON’T CANCEL the “NOT A CONTRACT” until the new cell phones you purchased are paid off!
YOU WILL ONLY LOSE this battle….
TIP: GET THE INSURANCE on the new phone, at an average of $10 per phone it’s a better deal and protects you for when you do break the phone.
The GOTCHA you don’t think about:
You “Help” your friend or family member get a phone or you add them to your cell phone plan.
When you sign your name to “help someone get a phone” you are signing a contract that obligates you to everything we have spoken about so far.
It does not matter if you never had any of the service you signed your name to. It in fact is absolutely meaningless if you had no relationship with that cell phone company other than helping that family member (for example).
What does matter is by signing that agreement and piece of paper you said to that lender/cell phone company, if this person does not pay the bill I WILL!
The same thing for adding your friend or family member to your cell phone plan. Remember it is YOUR CELL PHONE ACCOUNT. Which means the responsibility is yours and yours alone.
This is the same way you have a credit card that is yours and you add someone as an “authorized user”, this allows that person to use your credit card as if it was theirs but have no responsibility to the credit card company. That credit card company gave the card to you and for you to use as you see fit, any mistakes in judgement or use of it is your responsibility. If that party over uses it, while you have the right to sue the party who used it to pay you back for what they spent if that was your agreement. The credit card company has to claim against that person as you gave permission for them to use is and thus it is your financial responsibility.
The final gotcha:
“Switch now and don’t worry about cancellation fees. We will pay them for you”!!
Sound familiar? You should it’s on a ton of commercials, I have heard this story so many times it crazy and its mostly from consumers who have in their eyes already been screwed over since it’s on their credit report.
This is how it works, YOU cancel the old contract, and YOU get the final bill including phone charge fees, cancellation fees and the last month’s bill. THEN you send a copy of that to the new company who said they would pay for it and they will send you a pre-paid debit card in a month or so.
Can’t pay all of that in one shot or at all? Not the new carriers issue….
Is that someone you want to be a customer of? I wouldn’t. Did the sales person not tell you that? Did you ever hear the phase it’s not what is said but it is what you sign.
The sales person there makes commission, would you have signed up if they said this is how it really works so let’s get you signed up. I would not sign up after hearing the truth.
Just like my book The Real World of credit, this is how the Real World works.
So I hope this gave you some insight as to how something as simple as “changing cell phone companies” without paying attention can cause more problems than you realize.
Want to learn more about how the credit system works? Go buy my book online at here at : Barnes and Noble The Real World of Credit
Or contact me directly for a full blown color copy to truly grasp the real world of credit.
And of course have a question on credit for yourself? Contact me directly at: firstname.lastname@example.org