A growing market: cellphone service for low income - but beware the extra charges


Update: Assurance Wireless announced on Feb. 3 that it is lowering per minute charges for calls to 10 cents a minute.

Assurance Wireless is offering a cellphone and 200 minutes of calls for free to low-income people -- a noble goal but one that could prove costly if the users stick with the free phone service and buy more minutes after they've used up their 200 free minutes in a month.

The program, which started in December, offers the free prepaid service for people who have incomes 135% below the federal poverty rate -- $14,621 per year for a single person and $29,768 for a family of four, for example -- in New York, North Carolina, Tennessee and Virgina.

If household income isn't that far below the poverty level, people can also qualify by receiving government assistance such as Medicaid, food stamps, Supplemental Security Income, Section 8 housing, the National School Lunch Program's Free Lunch Program, and other government programs.