Avoid online pricing pitfalls this holiday season and save money

I have two words for you: price traps. As the holiday season approaches, you may see an increase in promotional offers from your ISP, making it easy to fall into a web of broadband traps. So if you’re starting your search for home broadband or want to switch providers, follow these tips to avoid paying more than you should for your home Internet.

Let me set the stage for you. You recently moved to a new house and want to set up the Internet. You tried to register online, but for some reason you are asked to call your ISP’s customer service hotline instead. You answer a call and want to subscribe to the lowest speed tier, but a customer service representative recommends that you choose faster plan.

A representative will tell you all about the additional benefits of the faster plan. The monthly price is decent, especially considering the speed you get. You’re hesitant but excited to try out an ad-free streaming service. You sign a contract. A little over a year goes by and you notice that your monthly bill has tripled. Sound familiar?

You think this is some kind of error, so call your Internet service provider. They explained that the price increase was due to the expiration of the promotional rates that were originally offered to you. In addition to the higher monthly bill, the faster plan included an HBO Max subscription, which you now pay for in full. You get frustrated and ask yourself: How did I get here?

There are various price traps, some more obvious than others. The above scenario is just a small example. You don’t have to fall victim to these schemes. Read on for some tips you can use to avoid these broadband pitfalls.

What are price traps?

Price traps are essentially a tactic that companies use to entice customers to pay more for a product, or in this case, a service, in exchange for “better or improved service.” Many ISPs will try to present you with a variety of promotions and offers when you sign up, such as bundling your home Internet with a mobile phone or TV package. More importantly, your ISP’s most common pricing trap is to try to get you to sign up for their promotional rates. These promotional prices are quite cheap, but the cool thing about this is that you can only keep this price for a limited time.

To help you avoid paying more than you need to, we’ve rounded up some of the most common ISP pricing traps:

• Promotional Price Trap: This one is the most common. Your provider may entice you to sign up for an affordable service. Promotional prices can range from $20 to $30 per month, which seems like a good deal. For most ISPs, these promotional rates may only last for a year or so until your price increases to standard rates, which can double or triple your monthly bill.
• Privileges and freebies: I know what you’re thinking. Who doesn’t like free stuff? Many internet providers offer incentives such as gift cards, certain discounts, and even free items to encourage you to sign up for an internet plan that you may not need. For example, Verizon Fios is currently offering new customers the option of an Xbox Gaming bundle if they upgrade to the 1GB and 2GB plans. Do you really need that kind of speed? More on this later.
• Price increases compared to last year: This is more difficult to detect because it depends on the Internet provider. Cable providers like Spectrum, Optimum and Sparklight are raising prices after a year. In some cases, suppliers can raise prices whenever they want. In addition to annual price increases, Spectrum is known for increasing overall prices for all customers.
• Terms of the agreement: If you decide to end your contract and cancel your internet services, you may be charged a rather heinous early termination fee of up to $500. To avoid this, you can look into contract buyout offers from providers like Spectrum, T-Mobile and Verizon Fios, but if that’s not available, you can always consider a no-contract service.
• Data limits and overage fees: Your ISP may set data limits in their plans. Once you reach this threshold, you may be charged an overage fee. To avoid this, you can turn to providers like AT&T Fiber, Astound, CenturyLink and Frontier, which do not offer data caps.
• Combining home Internet with mobile or TV service: Most ISPs offer to bundle your home Internet with a mobile or TV package with additional streaming services (Netflix, HBO Max, YouTubeTV, Disney Plus and others). Ideally, these packages could save you a lot of money initially, but you should always know the fine print. Look for any mention of price increases after a certain period.

Home internet prices can get quite high

The average price of home internet in the US is $63 per month. Some families may pay upwards of $100 or more per month, bringing the annual cost to around $1,200, but it doesn’t have to be that expensive. There are ways to maintain a strong home broadband connection without breaking the bank.

How to avoid price traps from Internet providers?

So now that you know the common ISP pricing traps, how do you actually avoid falling into one? Here are some tips to protect yourself from these broadband price traps.

Know your business: broadband operators are your friends

Starting this year, the Federal Communications Commission required internet providers to display their plans and pricing information through broadband labels. Don’t let all this information scare or intimidate you. First of all, find the detailed information at the top (plan type, pricing details, contract length) and move down the label. The plan type usually lists the speeds offered, and below that is the gold. Look for any mention of whether this price on the broadband label is the introductory price (or promotional price). If so, this should signal that prices can be expected to rise in the future. These broadband providers will tell you when your promotional tariff will expire and approximately how much you’ll pay after that.

Know what you need, let go of what you don’t need

In addition to prices, these broadband labels often indicate the download and upload speeds offered for that particular plan. It will also tell you whether these plans come with unlimited data or if there is a monthly data limit that you should be aware of.

Don’t fall for the bait, stick to your script

CNET broadband expert Sierra Noffke has plenty of experience combating pricing traps from Internet service providers. When signing up over the phone with her current internet provider, AT&T Fiber, she described the customer service representative as persuasive and persistent, urging her to sign up for a faster data plan, but she and her partner decided they just didn’t need it. high speed.

When she signed up for a 300 Mbps plan, the phone representative insisted that she choose a 500 Mbps or gigabit plan.

“You really need to have your script and just write down everything you’re going to say and just be strong about it,” Noffke said.

“As someone who reads about it every day, it made me doubt myself.”

Noffke and her partner determined what speed they needed based on their Internet usage, which they rarely use for gaming or streaming. Before you sign up for online services, be sure to do your research and see what works for you. When in doubt, stick to your script.

Feel free to call your ISP and negotiate a price.

CNET financial expert Danny Santana first signed up for Optimum in 2018. He gradually noticed that his monthly bill was increasing by $5 to $10 year over year, so he began calling Optimum every year to let them know that he would be changing service providers.

“As a money editor, it is always important to make sure you are not being chipped. You should always check your checking accounts.”

As he called Optimum year after year, he realized that “their goal is simply to achieve retention,” Santana said.

Since they are interested in keeping you as a customer, you can always try to negotiate with your ISP to reach a price that is acceptable to you. In Santana’s case, he was able to downgrade his plan to his desired speed and price while still maintaining his HBO Max subscription.

Is Internet speed too high a problem?

Yes. There is such a thing as too much speed if you pay more money for a plan that is beyond your needs. According to OpenVault’s latest Q3 2024 report, the average American household uses approximately 560 megabits per second download speeds and 31 Mbps upload speeds. If you live alone or with a roommate (or even a small family), you probably won’t need as much. So before you sign on the dotted line, keep in mind that your family may not have to spend money on a 1 or 2 gigabyte plan. However, if you have multiple people connected to your network, especially those who play or stream too much, you may want to opt for faster plans. To learn more, read our guide to what speed your family needs.

What are the pitfalls of broadband pricing?

The only thing to be wary of is paying more than you should for your home internet. To avoid these broadband pricing pitfalls, it’s best to do your research before signing up and be vigilant about hearing these promotional offers from internet providers. Remember that the service provider may offer tempting incentives, but they may not be what your family needs and could end up costing you more than double what you should be paying.

Read more: How to save money on home Internet

Frequently asked questions about the broadband price trap