Two years ago, Catherine Belknap and her son learned a lesson they won’t soon forget. When he was 11 and first owned a smartphone, he was chatting with his friends on Snapchat at home but he wasn’t logged in to the shared wireless network, or Wi-Fi. The phone used up the monthly allotted data — and then some.
When Belknap opened her monthly credit card statement weeks later, her jaw dropped. “The cellphone bill was for $600 and my son was devastated, too,” she says.
She spoke to her son about the importance of maintaining the Wi-Fi connection when online and also tweaked the phone’s settings so it would only connect online when a Wi-Fi signal was available. For most phones, the “settings” menu has an option to toggle the switch for cellular data — which allows smartphones to access the internet when Wi-Fi is unavailable, using data and possibly incurring charges — to the off position.
“Kids are going to make mistakes and parents shouldn’t shame them about it,” says Belknap, who is one half of the social media influencer duo Cat & Nat. “Instead, they should have conversations about using their phones responsibly.”
When parents buy their kids their first smartphone, data overage fees are just one of the many financial surprises they may encounter. But with enough foresight and precautionary measures, parents can avoid the pitfalls that could balloon their cellphone and credit card bills.
A simple plan and simpler phones
When Aaron Slade, an IT architect for board game company Asmodee, bought Jack, 12, their first phone in February, he didn’t want to fork over hundreds of dollars for the latest smartphone. Instead, he took advantage of a Rogers Wireless program to trade in an old phone to get an older but not archaic phone.
“My partner and I have given them a hand-me-down laptop before so this idea wasn’t new to Jack,” says Slade, who lives in Toronto’s Parkdale neighbourhood.
Paying for plans can be costly for adults, but for kids who may not be using it often, since many schools don’t allow cellphones in class, a low-cost plan is ideal. Slade pays $30 per month for service and $30 monthly to finance the phone, a cost he takes on.
Parents buying their children a phone and a plan should opt for a simpler, less feature-rich plan.
“I view it like when a teenager gets their first credit card,” says Toronto’s Robin Taub, author of “The Wisest Investment: Teaching Your Kids to Be Responsible, Independent and Money-Smart for Life.” “They get a simple credit card without any perks, and it acts to train them too on how to be responsible with their money.”
Watch those data overage fees and alerts
Most providers’ cell plans have a specific monthly data allowance — if you don’t know yours, it’s key you find out. When a smartphone user exceeds their plan’s data caps, the costs can add up, mainly if an old, grandfathered contract is still applied to the phone’s plan. Older plans can cost up to $70 per GB over your data limit, while some newer plans instead reduce the connection speed after you use a certain amount of data and don’t charge overage fees.
Keep in mind that under the Canadian Radio-television and Telecommunications Commission’s (CRTC) Wireless Code, service providers cannot charge you more than $50 in data overage fees (and $100 in international data roaming) within a single monthly billing cycle unless you explicitly consent to pay more. Providers are required to send you notifications when you are close to reaching your data limit to help you avoid bill shock.
Data plans with usage caps are often accompanied with text alerts that let kids know when they are close to reaching their limit. Educating young smartphone users about these alerts is critical, as well as having open conversations about the financial costs of owning a phone.
“Parents have to have digital and technological literacy while also passing that understanding of the costs of owning a phone down to their children,” says Belknap.
“Kids are getting phones younger and younger, some at 10 years old,” notes Taub, “and it’s vital for parents to have ongoing conversations with their kids about ongoing costs, who’s going to pay for what. Thankfully youth are increasingly aware, sometimes more than their parents, of data caps and how to log in to Wi-Fi outside their home.”
Apps and microtransactions can be costly
A sneaky way for smartphone bills to balloon, no matter the age of the consumer, is through paid-app purchases and transactions that happen within a supposedly free app. Gaming apps often open the door to these microtransactions. For example, Roblox features a virtual currency called “Robux” that can be purchased with real money to acquire virtual items that the player can use on their virtual character or “avatar.” Similarly, in the game Fortnite, you buy “V-Bucks” to buy “skins,” or outfits, among other items.
Both iOS and Android allow parents to toggle off the option to allow in-app purchases so that these virtual currencies can’t be purchased without parental consent. Parents should preview an app’s subscription fee or potential in-app costs before downloading it.
For Slade and Belknap, they set up parental controls in their kids’ phones to alert them when a new app is about to be bought. In the Slade household, Jack would have to enter their father’s Apple ID password to access any apps, free or paid.
“Constraining purchases and installs are important to us,” says Slade, “and this ensures I don’t pay through the nose for anything Jack wants to buy.”
Another protective approach for parents is allowing their children to buy add-ons within an app via a prepaid method. “Gift cards, like a $100 iTunes card, limit a parent’s liability to some point,” says Paul Davis, a Toronto-based online safety expert and speaker. “Instead, if you let your kids use your credit cards for these purchases, you might be surprised by what you see at the end of the month.” Gift cards are available for purchase for many of the popular online games.
Data roaming
Parents or guardians have to be proactive when it comes to ensuring their child’s phone doesn’t incur roaming fees, which happens when a device automatically connects to a wireless network managed by a provider other than your main carrier, typically when travelling internationally. You can prevent this by toggling off data roaming in a phone’s settings menu, or by enabling airplane mode, which cuts off the phone’s ability to access cellular and Wi-Fi access but also its ability to receive phone calls or text messages.
To avoid any roaming headaches, parents can opt to purchase an eSIM card and data plan for the country they are visiting. An eSIM is a digital version of a physical SIM card, and as it’s built into most modern phones, you don’t have to insert anything into the device, just activate it once purchased, ensuring the smartphone only uses the eSIM data. If you’re unsure how to enable any of a phone’s protective features, your cellphone provider should be able to help you.
Damaged phones, teachable moments
Let’s face it: kids are especially prone to damaging their cellphones. For Slade, if Jack drops the phone and it costs a bit to replace, say, a damaged screen, the incident can invite a teachable moment.
“Whatever the cost is, we’ll discuss the consequences with Jack, as we see the phone as a parenting medium, just like any other tool they might have,” says Slade.
Taub says repeated accidents can also be valuable conversation starters. “The first time it happens, parents may choose to cover the repair,” she says. “But if it continues to happen and depending on the child’s age and means, parents can ask them to pay for all or part of the repair. When kids have some financial ‘skin in the game,’ they learn to take better care of their belongings and to appreciate the cost of these devices.”
Davis would go even further. He advises parents to let their kids know that at 18, they will shoulder all of the phone’s costs, from the monthly plans to data.
“Having them pay overage fees will have them learn quickly to respect the caps,” he adds, citing one example, “and in the end, it will help them become financially responsible adults.”
Beyond financial considerations, parents who choose to give their child a smartphone must also be sure to make them aware of how to protect their online safety, including keeping their personal information, such as age and address, private, and not accepting requests from anyone they don’t know. Online exploitation of youth by predators often starts via games or apps that have messaging or video features.
“Parents should be invested in their kids’ online lives,” says Davis, “and ensure all their contacts are real human beings, that they aren’t strangers. Parents have to be engaged from day one.”
