How to save money on your phone bill

Aussies love their mobile phones - there are nearly 26 million in operation in Australia according to the Australian Communications and Media Authority's (ACMA's) Communications report 2009-10.

If you have a mobile you'll need to decide whether you want a post-paid service (where you get a bill on a regular basis) or prepaid (where you pay upfront to get a certain number of call credits).

Post-paid plans are slightly more popular, accounting for 59% of the total number of services but, for consumers who want to control how much they spend and don't want to be tied up in a contract, a prepaid service might be a better option.

If your children have a mobile phone, for example, prepaid is the way to go, especially if you want to avoid unexpected bills.

With prepaid you buy a starter kit from a particular provider. It gives you access to that phone network and a certain amount of call credits. Once you use up all your credits you can "recharge".

Comparing prepaid services, there are a number of factors to consider.

Of course how much you'll pay for calls is a major consideration.

Find out what the call rate is and whether it's the same all day or there are "peak" and "off-peak" rates.

It's also worth checking whether you will be billed by the second or in 30-second blocks.

By second is preferable because you only pay for the time you use.

Another charge to look out for is the flagfall, says Doug Purdie of Phonechoice. This is basically a "connection" fee you pay on top of whatever you pay for the call.

As well as the charges for calls you need to look at what you'll pay for other services, such as voicemail, SMS, MMS and data.

For example. Purdie says it's important to understand whether anything is charged at a different rate, such as 1300 numbers or, in some cases, collecting voicemail.

A major factor to think about with prepaid is how long you have to use the credits.

"Credit expiry is the biggest problem with prepaid because, depending on the plan, your unused credit can vanish every 30 days," says Purdie.

If you don't use your phone often, the longer the credit lasts the better. Also find out how you can recharge your credit and whether there is a minimum recharge amount.

You may be able to recharge over the phone or internet, or buy a recharge card or voucher at a supermarket, post office, petrol station or convenience store.

Finally, if you buy a phone as part of a prepaid package, ask if it is SIM locked. If it is you can only use that phone with that network provider. If you want to switch, you may have to pay for "unlocking".

Prepaid checklist

• What is the call rate and is it the same rate all day?
• Will you be billed in 30-second blocks or by the second?
• Is there a flagfall fee and, if so, how much is it?
• What will you pay for basic services such as voicemail, SMS and data?
• How long do I have to use my credits?
• How and where can I recharge my credits and is there a minimum recharge amount?
• Is there a SIM unlock fee; if so, how much is it?
• Are there any extra services included and if so, how much do they cost?

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