Why Your Smartphone Costs More Than You Realize

By U.S. News Staff ​

Many smartphone apps, including budgeting and price comparison tools, can help you save money. But data plans exact a steeper monthly cost than most simple cellphone plans, and in-app purchases lead to overspending. Here are eight hidden costs associated with smartphones and tips on how to reduce them:

1. The data plan. The monthly fee you pay for access to the Internet and streaming capabilities costs anywhere from $15 a month to as high as $80 or more, depending on your usage needs. If you use more data than your plan allows, you'll be charged "overage" fees on top of that monthly fee. To keep costs down, assess what you need from your data plan during a month of typical use, and choose the cheaper plan that will still keep you from going over the data limit -- and racking up those extra fees.

2. Apps. Apps are what make smartphones so invaluable to busy people: You can shop, check your bank account, play games, track what friends are up to and follow social media accounts through apps. They can also come with a price, though: Many apps cost money to download, and others allow for in-app purchases. You could end up spending more money through apps just because it's so easy.

%VIRTUAL-WSSCourseInline-884%In fact, a 2012 survey of 1,005 adults by the American Institute of CPAs found that more than half of respondents reported technology has made spending money easier. The respondents who said they use their smartphones to download songs, apps and other products spent an average $38 a month on those purchases.

AICPA suggests giving yourself a budget for smartphone-related purchases and setting up a separate credit card, with a low limit, to keep yourself from going overboard with those spur-of-the moment purchases.

3. Memory. While basic smartphones come with a decent amount of memory, buying extra gigabytes to store all your music, photos and other items can be as much as $100 or more. That increases the total price of the phone. Instead, you can use a free cloud-based storage system or transfer items you want to save, like photos, to your computer's hard drive.

4. Headphones. While most smartphones come with a standard pair of headphones, like the classic white earbuds with iPhones, not everyone is happy with that basic model. Some consumers opt to buy a specialized Bluetooth headset or Beats headphones, which start around $200.

5. Protection. To protect your phone, you'll probably want to consider buying some kind of case for it, which can range from $10 to $30 and up, depending on how fancy you want to get. Purchasing insurance for your phone is another way to guard against losses and accidents, but it's not cheap. A typical two-year insurance plan will run between $100 and $200. Many financial experts say it makes more sense to insure the phone yourself -- in other words, to pony up the cash for a replacement or repairs if necessary. In the meantime, you can reduce your risk of needing to buy a new phone prematurely by taking good care of it and using that protective case.

6. Repairs. If your phone starts malfunctioning or needs a new screen, those repairs can come with a high price tag. According to Apple, replacing or repairing a broken iPhone 6 screen costs $109, and a replacement screen on an iPhone 6 Plus or iPhone 5 costs $129. Just another reason to buy some protective gear and to always use it.

7. Mindless shopping. Many people play on their phones while unwinding from the day, and if you have your favorite shopping apps such as Amazon, Keep Shopping or Poshmark on your phone, then you just might make some extra purchases. Consider deleting the apps or exerting some self-control during those hours when you're most likely to buy items you don't really need.

8. Children. If you let your children play with your phone, they can accidentally purchase items, and sometimes a lot of them. It's such a widespread issue that Apple offers a refund process for purchases made by minors without parents' knowledge. (Parents have to file all receipts and make a request for a refund through the company.) Parents should also consider strengthening their password settings and turning off in-app purchases on their phones as a preventive measure.