A mobile phone plan might seem straightforward at first glance, but hidden fees can significantly inflate your bill. A typical American household with four phones on a “family share” plan, paying $100 monthly for taxable wireless service, spends nearly $294 per year in taxes, fees, and government surcharges.
The combination of taxes, fees, and government surcharges has reached a new high, making up 24.5% of the total tax on services that can be taxed in phone plans.
I'll explain the often-overlooked fees in your mobile plan and how you can avoid them.
» Here's how you can pick the right mobile plan for your needs.
Understanding Extra Charges on Your Mobile Plan
The amount you pay in extra charges on your mobile phone plan depends mainly on where you live. These charges vary from state to state and even city to city. As of 2024, Illinois residents face the highest wireless taxes in the country at 33.8%, followed closely by Arkansas at 32.2% and Washington at 32.1%. In contrast, Idaho has the lowest wireless taxes at just 13.7%.
Your phone bill includes government-mandated fees from your mobile provider. Knowing these charges and how they work can help you control your mobile expenses better.
Different Types of Fees and Taxes in Your Mobile Plan
Let's break down the different fees and taxes you might encounter in your mobile plan so you can understand exactly what you're paying for each month.
Regulatory Recovery Fee
This fee on your phone bill isn't a government-required charge. Instead, your mobile company adds a small extra cost to cover expenses related to complying with various federal, state, and local regulations. While these fees might not be significant, they are unavoidable and are a standard part of your mobile plan's costs.
Administrative Fees
The Administrative Fee on your mobile bill helps pay for your carrier's various costs, like making calls to other networks, renting space for cell towers, and general maintenance. These fees are usually small, but they're a standard part of your bill and can't be avoided.
A company like AT&T charges a monthly fee of $1.99 for each line on your account, which isn't included in your plan.
911 Service Fee
The fees you see on your phone bill for emergency services are there for a good reason. They are collected by the carriers, sometimes as a requirement, to support local government efforts in funding crucial services like fire and rescue.
They're typically charged as a set amount per phone line or as a percentage of your bill's revenue. The fee varies by state, ranging from $0.20 to $5.00 per month 1. For example, in Florida, it's 40 cents per month, while in Pennsylvania, it's $1.65 per retail transaction.
To see the specific emergency service fee rates in your state, the National Emergency Number Association provides a detailed list.
Universal Service Fund (USF) Fee
The Federal Universal Service Fund (USF) is a government-created fund to ensure everyone in the US can access telecommunication services. It helps pay for services in rural areas, schools, and health clinics.
The government charges this fee to carriers as a percentage of their revenue and supports these essential services. While carriers aren't required to pass this cost to you, they often do.
Verizon provides a government tax and fees estimator tool to determine what you’ll pay in your area.
Number Portability Fee
When you transfer your phone number to a new service provider, certain carriers, like Ultra Mobile, charge no fees for this service. This number portability process allows you to keep your existing phone number when switching carriers, even if you owe your old carrier for unpaid balances or termination fees.
According to the FCC, companies may charge you to port your number, but you can ask whether any fees can be waived or negotiated.
Paper Bill Fee
If you're still getting a paper bill for your mobile plan, consider moving to paper-free billing. Many carriers, including Verizon, offer discounts of $5 or $10 per month for each line when you use Auto Pay with a qualified payment method and paper-free billing. This switch helps lower your monthly bill and supports environmental sustainability.
Activation or Upgrade Fee
Ask about activation or upgrade fees when you sign up for a new mobile plan or upgrade your phone, as you can often negotiate these fees. Cricket Wireless, for example, charges a $25 activation fee for in-store device activations but no fee for activating online. For upgrading to a new device purchased from Cricket (in-store or online), they also charge a $25 fee.
» Ready to upgrade? Check out our top Verizon alternatives.
Early Termination Fee
Most carriers, including Mint Mobile, offer trade-in deals to encourage you to switch. These deals provide a trade-in value for your current phone, which can be used to offset any ETF from your existing carrier.
Mint Mobile, specifically, does not charge a cancellation fee for terminating your subscription, making the switch more appealing. However, you're still responsible for any outstanding balance or unpaid charges.
Overage Charges
Stay informed about your carrier's policies on overage charges, which can apply if you exceed your plan's limits for minutes, texts, or data. This is also important for international phone usage without a specific plan.
Tello, for instance, does not charge overage fees. Exceeding your data limit only results in slower speeds once you use up 25GB of high-speed data in a month. You can avoid these limitations by monitoring and restricting your voice and data usage.
Roaming Charges
Before starting your international travels, check the US Department of State travel advisories for important safety information and guidelines. The FCC also recommends doing the following before starting your international travels:
- Contact Your Carrier: Discuss international roaming with your mobile carrier.
- Phone Compatibility: Check if your phone works with the network in the country you're visiting.
- Function Support: Confirm if your phone supports voice calls, text messaging, and data usage abroad.
- Roaming Rates: Inquire about the varying roaming rates for your travel destinations.
- Usage Tracking: Ask how to monitor your usage to avoid extra charges.
- Billing Delay: Roaming charges may appear on your bill one cycle after you return.
Adding a data plan for international travel is wise to avoid hefty roaming charges. A carrier like AT&T offers an International Day Pass for $10 per day, allowing you to use your phone as you would at home in over 210 destinations. With this pass, you get unlimited talk, text, and data for the day, and you're only charged for the days you use your phone.
Premium Text Message Charges
These charges refer to additional fees that mobile carriers may apply for certain text messages. These messages often include content such as ringtones, trivia, horoscopes, and other premium services.
It's typically billed separately from standard text messages and can result in higher costs. To avoid these charges, be cautious when interacting with premium text message services and consider setting up notifications to monitor your usage and prevent unexpected costs.
Device Payment Plan
You can save by signing up for AutoPay with your mobile plan. For instance, Verizon offers a minimum $10 monthly bill discount when you activate this feature. If your plan costs $50 monthly, AutoPay will bring it down to $40. This encourages customers to automate bill payments, ensuring on-time payments and avoiding late fees.
Plan Changes
Typically, changing your mobile plan doesn't incur extra charges with most carriers. However, if you request additional data or premium services at a higher cost, you may see an increase in your monthly bill.
If you upgrade to a plan with more data or add international calling features, you'll likely be charged the corresponding additional fees.
Guarding Against Bill Shock: Tips for Mobile Users
According to an FCC survey, "Bill Shock" is surprisingly common, impacting one in six mobile users in the United States. To avoid this issue, stay vigilant and well-informed about your mobile plan.
By staying proactive and aware, you can protect yourself from these often-overlooked mobile plan fees and enjoy greater control over your monthly expenses.
» Choosing the best phone plan: prepaid vs. postpaid?
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