Your teen’s cell phone

From: Financial Consumer Agency of Canada

Your teens may want to get their own phone separate from the family’s cell phone service plan. A teen’s first cell phone is often their first experience with ongoing financial responsibility. Make sure both you and your teen understand all the details of any cell phone service contract before signing.

Does your teen need or want a cell phone

Discuss with your teen if they need a cell phone. For example, they may need one for work or school.

They may not need a cell phone, but want one. For example, they may want a cell phone to keep in touch with friends.

Help your teen decide if getting their own cell phone is within their budget. Note that if they delay getting a cell phone, they may be able to save money for another goal, such as post-secondary education.

To save money, your teen may consider buying a device that gives them access to Wi-fi. Wi-fi may be free at places that your teen visits, such as their school. This is less expensive than paying for a cell phone plan or data plan.

Choosing a cell phone service plan

Help your teen determine the type of cell phone service or data plan he or she needs. Look at different plans and compare the fees, services and features.

Shop around for a service provider

Many cell phone service networks offer free talk and texts between customers. Your teen may save money by choosing a provider that their friends or family also use.

Consider whether the provider offers good service network coverage in the area where your teen lives.

Types of cell phone service plans

There are a variety of plans to meet different needs.

Pay-as-you-go plans

With pay-as-you-go plans, you pay only for the data, minutes or texts you use. You can use the data, minutes or texts over weeks or months.

To use your phone, you must put money into your pay-as-you-go account. The money in your account goes down as you use data, minutes or texts. Your provider sets the cost of each minute, text or amount of data used. There is usually a monthly service fee.

Your teen will have to buy a phone before they can sign-up for a pay-as-you-go plan. They may have to buy a SIM card from the cell phone service provider.

This type of plan doesn’t usually require a contract.

Monthly plans

With monthly plans, you pay a set monthly fee for a certain amount of data, minutes and texts.

Your teen will get a bill each month telling them how much they owe. Each plan has a limit on how much data, minutes and text their monthly fee covers. If your teen has gone over the limit specified in their plan, they will have to pay extra. The fees for going over the limit can be very high.

This type of plan requires a contract.

Your teen may include the cost of the phone in their monthly payments. If your teen already owns their phone or plans to buy their phone outright, they may be able to get a cheaper monthly plan.

Pre-paid plans

With pre-paid plans, you pay in advance for your calls and text and data use for a certain amount of time. Usually you sign up for a pre-paid plan on a monthly basis. You don’t need to sign a contract.

This may be a good way to avoid unexpected charges.

Features of cell phone service plans

When choosing a cell phone service plan, consider the number of minutes, texts and data your teen will need. Avoid paying extra for a plan that includes more than your teen will use.

A cell phone service plan with more features will be more expensive. Talk with your teen about which features they need and how they’ll pay for them.

Warranties on your teen’s cell phone

Cell phone service providers may offer an extra warranty for your teen’s phone for a fee. Usually, these warranties or policies replace the phone if it’s lost or damaged. Discuss these options with your teen and think about if the added cost is worth it for them.

How to get out of the contract

Find out how to get out of the cell phone service contract early if the plan is no longer meeting your teen’s needs. Your teen may have to get out of the contract if they:

break or lose the phone
want to upgrade to a new cell phone
change plans to better suit their needs

Make sure both you and your teen understand the terms and conditions of the cell phone service contract before signing it.

Budget for monthly cell phone bills

Encourage your teen to make a budget. This way, they can plan how to pay the monthly cell phone bills.

Make sure your teen also budgets for:

additional monthly fees, such as a 911 access fee
one-time fees, such as sign-up fees
taxes
accessories such as earphones or a protective case

Learn what steps to take to make a budget.

Extra costs or charges

Before signing up for a cell phone service plan, help your teen consider how they will handle any extra charges. For example, charges for the use of additional minutes, texts or data. Decide who will pay for any extra charges on your teen’s phone.

Go over the cell phone bill with your teen every month. Compare any extra charges with the original plan. Talk about what they could do to stay within the plan next month. If there are any errors on the bill, have your teen to follow up with the cell phone service provider immediately.

Make sure your teen understands which features have an extra cost. For example, their cell phone service plan may not include:

unlimited Internet use
downloading many large files
streaming TV shows, music or movies
long-distance calls

Protecting your teen’s credit history

Not paying a cell phone bill can seriously damage your teen’s credit history. Explain the importance of credit reports and scores.

Your teen’s credit history is used to calculate a credit score. This score is used by lenders to decide how risky it is to lend your teen money. It’s also used by employers and landlords. A poor credit score could make it harder for your teen to:

get a loan or credit card
get a job
rent an apartment

Learn about credit reports and credit scores.

Co-signing a cell phone contract

Teens may need an adult co-signer to get a cell phone service plan.

This means that you and your teen will both be equally responsible for paying any cell phone service charges. If your teen misses or is late with a payment, it will show up on your credit report.

Make sure that both you and your teenager understand the terms and conditions of the cell phone service contract before signing it.

The legal age to sign a contract

The legal age a person can sign a contract varies by province or territory.

The legal age is 18 years in:

Alberta
Manitoba
Ontario
Prince Edward Island
Quebec
Saskatchewan

The legal age is 19 years in:

British Columbia
New Brunswick
Newfoundland and Labrador
Northwest Territories
Nova Scotia
Nunavut
Yukon

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