Two things immediately come to mind, though if I can think of any more I'll update this entry. The two things that are hyped by marketers but kind of fall apart if you analyze them are: rollover minutes for wireless service and no interest, no payments for a certain time period when you buy something.
Rollover Minutes
Most wireless plans give you a set number of "anytime" minutes during a month. If you use more than your plan limits, you pay overage charges. If you use less than your limit, the remaining ones go away. The idea of rollover says that if you don't use all your minutes in a given month, they will be added to your allowance for the following month, so you won't have to pay overage charges if you use more than your plan states.
Sounds great, doesn't it? You get to keep all the minutes you pay for and can avoid overage charges at the same time! Well, they do expire eventually, but that's not the scheme.
Think about this. Most people probably have a fairly consistent phone usage pattern. Barring extraordinary circumstances, they probably use their phone roughly the same amount, at the same times of day, at the same times of the month. If your usage pattern gets you to within 30 minutes of your plan's limit in a month, you are probably on the right plan. However, what do you think the chances are that you would be significantly under your minutes one month (so your minutes roll over), and then significantly over the next month (so that you would use the rollover minutes to avoid overage)?
Probably not much.
In fact, I would be willing to bet that if a person consistently under-uses minutes month by month, they never tap into the rollover minutes (which eventually expire, as I mentioned previously). So the end result is that the notion of "rollover minutes" very likely keeps people paying for a more expensive plan with more minutes than they will realistically use in a given month, with the idea that "I can possibly use my extra minutes sometimes".
Example: I get 300 anytime minutes in a month, but only use 200. So 100 roll over to next month. Next month, I will have 400 anytime minutes, but only use 200 again. So the following month, I will have 500 anytime minutes. If I typically only use 200 minutes in a month, do I really need the extra 300 "just in case"? What is likely to happen to require me to spend an extra 5 hours on the phone in a month? The rollover minutes eventually go away, having the same effect as if I had just not used them in the first place.
There may be people whose usage allows them to benefit from rollover minutes. But overall, it seems to me like it's just something that sounds good on paper but provides less real benefit to the customer than expected.
No Interest, No Payments
This is something else that sounds too good to be true. Purchase now, and get no interest and no payments for 12 months!
Let's take a look at each part of that.
No interest. This means that for the first 12 months, whatever item you have purchased on credit will not accumulate interest charges. This is pretty nice, since it means that any money you pay towards the total you owe will be free from interest charges -- and in fact, if you pay off the entire amount, you will not have paid any interest at all. This is sometimes called "same as cash", since they are treating it as if you had paid cash at the point of sale (instead of financing).
No payments. This means that for the first 12 months, you will not be required to make any payments at all towards the item you have purchased. You can take it home today and not have to even think about paying one cent for it for a whole year.
But wait a minute.
If I make no payments for the first 12 months, then my first payment will be on month 13. However, month 13 is when interest starts accumulating on the account, so any payments made from month 13 on will have to include interest payments. On the other hand, if I want to take advantage of the no interest period, I have to make some payments during the first 12 months.
In other words, "no interest" and "no payments" are mutually exclusive.
Sure, you can do something wacky like make no payments for the first 6 months, then pay the entire purchase off in the second 6 months. But if you have the means to pay it off in 6 months, why not just pay it off in the first 6 and be done with it?
Don't let this discourage you from making a purchase on a "no interest, no payments" offer. Just realize ahead of time that you can't take advantage of both, so pick one or the other and go with it that way.
(No, not the movie titled Cellular, though I did see it recently and was not tremendously impressed.)
Just some random thoughts on wireless/mobile phone usage.
I tend to be a light cell phone user -- a few hundred minutes per year is more than sufficient for me. That being the case, I have been a prepaid wireless user for the past few years (as long as I have had a cell phone). I have found that for light usage, prepaid wireless is a great deal; here's why I think so:
- It is much easier to control the costs. I am not given to being "chatty" on the cell phone (or on any phone, for that matter), so there may be some months that go by that I may only use a few minutes. With a traditional wireless plan, I would pay the same rate every month, no matter what my usage is. ("Rollover" minutes are becoming popular, though I believe it is more or less a crock of crap designed to get you to sign up -- but I may post more about that in a separate message.)
- There are no contracts to sign. Most of my friends who subscribe to traditional plans are in 1- or 2-year contracts. Maybe I have issues with commitment, but I just can't see locking myself into paying someone every month for something I don't use all that often.
- No credit checks, no extended information given out. One of the companies I use, Tracfone, allows you to simply purchase a phone in the store (Wal-Mart, Target, and K-Mart are carriers, among others) and add airtime via the web or by purchasing cards in the store. No personal information is required. I am told this makes prepaid service very popular with drug dealers, pimps, and mafiosi.
There are some drawbacks to prepaid wireless, however:
- Most (though not all) carriers require phones with special programming in order to manage the prepaid account balance. What this means is that if you ever decide to change carriers, you will probably be shelling out some bucks for a new phone.
- Phone number portability is not very reliable. Since prepaid carriers often lease service from standard carriers, keeping track of who "owns" your number can be tricky -- and trying to keep it with you as you change carriers can be a nightmare. (Of course, if you are like me and there are 10 people or less in the world with your wireless number, a simple email message can take care of that problem.)
- Customer service is often sub-par. TracFone (the provider I use) seems to cycle through offshore outsourced customer service companies; this leads to poorly-trained CS reps, and can give you a struggle to try and communicate when you're already frustrated about a problem.
- Some more advanced features are not available. I have found that most prepaid providers offer some sort of "standard" digital service package, which includes caller ID, call waiting, voicemail, and text messaging. Things like Internet access/WAP, downloadable ringtones, and games tend not to be as available (for things like this, you would need to check out a standard wireless provider's prepaid option, instead of a reseller).
- Nearly every provider has a slightly different way of billing for prepaid. You need to examine your usage pattern in great detail, and evaluate the different options available. There are generally two options for prepaid; pay-as-you-go, and monthly. The pay-as-you-go allows you to simply pay for minutes as you need them, while the monthly plan allows you to pay for the UPCOMING month, and gives you a set number of minutes (this is much more like a standard wireless plan, except you pay a month ahead instead of a month behind). This can be confusing if you are not aware of the difference.
- Coverage area can be very random, depending on your provider. One of the providers I use (Tracfone) leases airtime from a number of different carriers (digital and analog), so I have never been without coverage. The other provider I use is strictly a Sprint PCS/CDMA reseller, so the phone would be out of service area anytime we are off the Sprint digital network. If there is a particular phone type (CDMA, TDMA, GSM) that you prefer, you may not have as many options as with a traditional plan.
I am happy to use prepaid wireless, and do not see myself signing up for a traditional wireless plan anytime in the near future. Though critics will point to a higher per-minute cost (can be upwards of 10-15 cents per minute or more), for my usage it makes more sense to evaluate the overall or per-year cost. The plan I am subscribed to costs around $90/year ($7.50/month), and includes enough minutes that I have never run short. The plan my wife is subscribed to costs around $10/year (83 cents/month). Compare that to $40-50 or more per month for a traditional wireless plan, and the savings become immediately clear. Again, we are both light users (emergencies, and the occasional "I'm at the store, what do we need?" calls), so these prices may not work for everyone. A nice thing, too, is that you can add extra minutes if you find yourself running low. (Going out of town for the weekend? Add an extra 30 minutes or so just to be on the safe side.)
Here are links to the services we use. We have used Tracfone for a number of years and are very happy with them; STi Mobile is a new venture, but so far it seems to be working out well:
Tracfone: http://www.tracfone.com/
STi Mobile: http://www.stimobile.com/