NEW gadgets often make our lives more convenient but there can be financial traps for the unwary. So-called smart phones are a great example of this, with the Telecommunications Ombudsman warning that smart phones can create a nasty new condition known as 'bill shock'.
'Bill shock' can happen when the charges on your smart phone are much more than you expected, something that can easily occur if you've used the phone for internet downloads.
The Ombudsman reports people receiving smart phone bills of hundreds, even thousands of dollars. In extreme cases, the hapless phone owners have turned to personal loans to meet the cost.
Telcos have an obligation under the Telecommunications Consumer Protections Code to monitor customer usage and give you advance notice of any unusual or excessive usage patterns. But I wouldn't rely on this. It makes more sense to think about how you'll use a smart phone in the first place.
The Ombudsman recommends asking your service provider about how different data downloads will affect the total cost. As a guide, checking emails should cost you far less than downloading music or videos.
Mobile phone plans in general can be very confusing, so be quite clear about what is involved in your smart phone plan. With some plans, if you exceed the data download limit on a capped plan, your internet service may be slowed down but you may not be charged extra. However, other plans, especially the cheaper ones, start charging at significantly higher rates if you pass your monthly limit.
As a rule, the cheaper the plan the higher the rate at which calls and downloads are charged, so you need to think carefully about this, estimate your monthly usage, then choose a plan accordingly. Signing up for the cheapest monthly plan, if your usage is heavier than anticipated - or hoped for - may not end up being the cheapest option.
If you haven't used a smart phone before, and you're unsure about how often you'll use the internet, it's worth enquiring if you can change your plan.
With some carriers, you can increase your monthly plan without problem if your usage is greater than anticipated. However, it's unlikely you will be allowed to decrease your monthly plan until the contracted plan expires or you buy out of it.
All these tips are quite straightforward but if you're buying a smart phone for the kids, some hard and fast ground rules may need to be established early on.
For ideas on how to trim your smart phone costs, go to the Telecommunications Industry Ombudsman site at www.tio.com.auss.
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