smart spending

3 recession-busting gadgets

Highlights
  • Prepaid phones, netbooks and miniature camcorders grow in popularity.
  • Costs are cut by eliminating some of the product's bells and whistles.
  • Consumers may have to give up some performance in exchange for a cheaper price.

Recession or not, Americans love their high-tech toys more than ever.

Try to take away their laptops, cell phones and cameras, and you might hear an echo of Charlton Heston's famous National Rifle Association slogan, "From my cold, dead hands!"

But the length and breadth of this downturn has many looking to cut back expenses anywhere they can.

"Consumers are looking for areas even within technology to cut back," says Shawn DuBravac, research director of the Consumer Electronics Association. "So as much as these lower-priced products offer them the ability to still spend on technology -- but do so at a lower price point -- it's attractive to them."

Retailers and service providers have responded with new classes of computers, cell phones and cameras that appeal to consumers hoping to save a buck while still enjoying the benefits of high-tech gadgetry.

Here are three cash-saving products that allow consumers to get the features they need without paying for bells and whistles they're unlikely to use.

Pay-as-you-go phones

If your cell phone bill feels a little bloated for today's lean times, consider prepaid service. Unlike traditional contract-based cell phone service, pay-as-you-go services charge you only for the minutes you use.

Although the per-minute rate is often higher compared with contract-based plans, prepaid models offer three advantages for consumers: a big reduction in monthly service charges, no long-term contract and typically no credit requirements. 

“Consumers are looking for areas even within technology to cut back.”

For years, prepaid phones were consigned to the fringes of the cell phone marketplace. But pay-as-you go services have become more attractive as carriers expand their range of models and offer improved technology in their products.

"A lot of the high-end features that maybe were born in smart phones have been slowly trickling down," says Michael Morgan, mobile devices industry analyst for ABI Research.

Although flagship smart phones are still mostly the domain of traditional "postpaid" providers, features such as Bluetooth, Wi-Fi and Internet browsing are starting to penetrate the prepaid market, Morgan says.

Morgan says a few prepaid providers offer an all-you-can-eat service -- unlimited voice, text and data -- for as little as $50 per month, about half of what you'd pay for the same service from a postpaid provider. 

Prepaid services do have a few disadvantages. Unlike phones from postpaid providers, most prepaid phones must be bought upfront with little or no subsidy to reduce the cost.

Prepaid providers' networks may not be as robust as those offered by postpaid providers. If you do a lot of international calling or roam outside a prepaid service's coverage area, charges may be higher than they would be in a postpaid plan.

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Many prepaid plans also require you to use minutes you've purchased within a given time frame, or risk losing them. And, of course, if you've recently signed a long wireless contract, the fees you'd incur by breaking that contract may outweigh any price benefit of switching to prepaid service.

Still, that fat monthly cell phone bill is a big target for budget cutters, and the flashy, new generation of prepaid phones undermines postpaid providers' claims that their services justify higher costs, Morgan says.

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