The sneaky reason your cell phone bill is so high: Customers are stinged with hidden charges of up to $300 a year — so how does your state compare?
- Mobile phone service charges now account for more than a quarter of the average bill in the United States
- Last year, consumers paid about $11.2 billion in cellphone charges and taxes
- Experts recommend better understanding itemized charges to avoid surprise bills
Americans are being stung by hidden cellphone service charges and taxes of up to $300 a year, which averages more than a quarter of their bill.
Customers face a lottery over how much they are obligated to pay, as additional fees vary widely from state to state. Illinois has the highest taxes, while those living in Idaho pay the least.
Hidden charges are a combination of fees and taxes. Some are mandated by the government while others are imposed by mobile phone providers.
Last year alone, consumers paid about $11.2 billion in taxes, according to the latest data of the Tax Foundation think tank.
It found that the average mobile phone service charge soared for the fifth consecutive year and now represents a record 25.4% of the average bill.
Customers face a lottery as additional fees vary from state to state
According to the study, a typical household with four phones on a “family sharing” plan paying $100 a month would shell out nearly $305 a year in government taxes, fees and surcharges.
Illinois residents face the highest taxes in the nation, with costs accounting for 34.9% of bills. Next come Washington at 32.9% and Arkansas at 32.2%.
Idaho has the lowest tax at 15% of the average bill. Nevada ranks second with 16.1%, followed by Delaware with 19% of the average bill made up of taxes and fees.
These fees include state and local taxes such as 911 fees which are used to fund access to emergency services in your area, and 988 fees which fund suicide prevention hotlines.
The Universal Service Fund is used to provide rural and low-income communication services and operators are required to contribute a percentage of their revenues to it.
However, some charges, such as the “FCC Recovery Fee”, mislead consumers as they appear to be official government taxes, but are in fact the provider’s own charges.
Over the past 10 years, the costs paid by providers to facilitate wireless service have actually steadily declined. Average wireless service provider charges have fallen 24% since 2012, from $47 per line per month to $35.74.
But consumers don’t see those savings reflected in the bottom line of their monthly payments.
In order to avoid a surprise invoice, it is important to understand the purpose of each fee and how detailed it is.
The Federal Communications Commission (FCC) said it receives tens of thousands of complaints each year about confusing bills.
When you know what the fees meanyou are in a better position to know if there is something wrong with your invoice and if you should contact your supplier and dispute it.
Hidden charges are a combination of fees and taxes. Some are mandated by the government while others are imposed by mobile phone providers
Illinois residents face the highest taxes in the nation – with costs accounting for 34.9% of bills
The FCC provides information on your rights when it comes to your cell phone bill.
You may not be able to reduce the fees imposed by your state, but you can choose the carrier that offers the lowest rate for a plan that meets your needs.
Verizon, for example, provides government tax and fees estimation tool so you can determine exactly how much you’ll pay in your area.
Remember that it is always possible to call and negotiate with your supplier.
With just a few calls, you could save hundreds of dollars in annual costs by haggling the price or discussing your options with your provider.