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Buying a cell phone for your teen

Every American teenager wants one, and more than half already have one. We're talking about cell phones, of course.

But before you give in to your son's or daughter's plea for one, be sure to do plenty of homework.

Selecting a phone and calling plan at random and handing the phone to your kid is a great way to waste a whole bunch of money. The biggest problem stems from picking out a calling plan that doesn't match your teen's calling patterns.

"Teenagers aren't going to have the phone in the car just for emergencies," says Joni Blecher, who writes the "Ask the Cell Phone Diva" column for

Stick cell phones in the hands of teens and they'll be calling and text messaging their friends in no time flat. They may even call their parents every once in a while.

They'll blow through the minutes allowed in the cheap, just-for- emergencies calling plan you selected in a flash. You'll get stuck paying 45 to 50 cents per minute on a ton of overage calls before the month is through.

"A cell phone is like a blank check," says Steve Rhode, president of, a nonprofit consumer education organization. "It's easy for the bills to get out of hand."

If you're worried about sky-high cell phone bills, you may want to buy a prepaid cell phone for your teen. With a prepaid cell phone, the phone comes loaded with a set number of minutes when you buy it. You add more calling minutes as you need them. There's no annual contract or monthly bills to worry about.

Prepaid phones: Cells on an allowance
A prepaid cell phone is a great way to keep your teen on a strict budget.

"The nice thing about prepaid is it's a hard stop," says Sam Simon, chairman of the Telecommunications Research and Action Center. "When you're out of money, you can't talk."

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Let's say you buy a prepaid cell phone for your teen and you agree to charge up the phone with a fixed amount of airtime each month. If your teen goes over that airtime, the phone won't work. Their only other option is to add money to the phone themselves.

"If the teenager wants to talk more they can add their own minutes and pay for their own minutes," Rhode says. "That's a very powerful lesson to teach children -- that access requires financial responsibility."

Companies selling prepaid cell phones include Virgin Mobile USA, TracFone, AT&T Wireless and Verizon Wireless.

A typical start-up package including phone, charger and some minutes runs about $100.

The downside to prepaid plans is you'll pay a higher rate per-minute for your calls. You could pay anywhere from 15 cents to 60 cents per minute for calls with a prepaid phone. Be sure to shop carefully. Here are some key questions to ask when shopping for a prepaid phone deal.

Postpaid: Cheaper, but no limits
If you trust your teen to manage their airtime wisely you may want to buy them a regular cell phone with a postpaid calling plan. Calling rates are lower than prepaid plans so you'll pay less for airtime. But you'll also have to pay a monthly service fee and sign a service contract that lasts a year or longer.

With a postpaid calling plan, there's no cap on your airtime. You can use the phone as much as you want.

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-- Posted: Sept. 29, 2003
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See Also
Matching your teen and a cell phone plan
Key questions to ask about prepaid phone plans
Cell phone comparison worksheet
Glossary of personal finance terms
Glossary of personal finance terms
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