Does Cord-Cutting Actually Save Money?

Cord-cutting can reduce costs, particularly if you are judicious about your use of streaming services. Cutting the cord can be difficult, however, and if you prefer to keep cable service there may be ways of working with your cable company to keep all services, including cable, available. Otherwise, prepare for a one-time investment in electronics, such as a digital antenna, Smart TV, or streaming player.

If you need to cut your household expenses, you've probably thought of canceling your cable TV service. A lot of people are doing just that these days, and with streaming services it is easier than ever before to remain entertained without having to pay high cable bills every month.

While it is true that cutting the cord can save you money, it isn't always as easy to do so as you may think. Cable company pricing along with the increasing costs of streaming services can make it hard to actually realize savings in the long run.

If you choose to cut your cable service, you will need to develop a strategy not only for dealing with your cable company but managing entertainment costs without cable service. On the flip side, you may also find that you can save money without cutting the cord.

What is Cord-Cutting?

If you have cable television, your household has a cable running into it from outdoors. These cables connect you to your local cable provider's network. When you end your service, eventually the cable company will come out and cut the cord.

The rise of online streaming services has led many consumers to discontinue their cable plans and rely on their household Internet connections to stream live and on-demand video content, which includes both traditional and cable networks as well as streaming-only apps and platforms. Typically, the decision to cut the cord is made as a budgetary decision: Cable service can be expensive and it can be cheaper to stream entertainment or even use a standard TV antenna and restrict television watching to local stations.

Cord-Cutting Technology

Once a household cuts the cord, it has three options for watching television:

1. The first is to purchase a digital television antenna and attach it to a standard TV set. This is a very inexpensive option for those who simply want to watch free, local networks and who do not wish to invest in a so-called smart TV, such as those produced by LG and Samsung.

2. Purchase a streaming device: Streaming players, such as Amazon's Fire TV, Roku, and Apple TV can be connected to your television for streaming through your Internet connection.

3. Purchase a Smart TV: Smart TVs are programmed with apps that you can use to stream live and on-demand programming from a range of services and platforms. Some are free, while others require you to pay for a subscription. It is also possible to stream video from a mobile device (such as a cell phone) onto your smart TV.

Why Cord-Cutting Is a Challenge

Given the enormous range of streaming options available, it may seem like cord-cutting is a no-brainer: Why spend money on cable when it's just as easy to stream entertainment through home Internet or mobile devices?

There are, however, two factors that can make discontinuing cable service a challenge. The first is accessing local programming. If you don't watch broadcast television that much, this may not be a significant concern. But if you do like to watch local channels, which might include local news and talk shows, be sure to look into options for streaming the shows once you've discontinued your cable service. Even if you don't typically watch broadcast television, you may want to have access to local programming in case of emergencies. (Purchasing an emergency radio for your home can serve that purpose.)

The second issue is often the more difficult to overcome. If your household's Internet or landline phone connections are through your cable company, You may find it difficult to see any savings once you cancel cable. The reason is that these companies bundle your services together. When you ask them to cancel the cable, the customer service representative will likely tell you that since you are on a special bundled package, you won't see any real savings if you cancel your cable.

Your options will depend on the availability of other telecommunications providers in your area. If you have your choice of companies, you could try telling your current provider that you are moving to the competition. At that point, the customer service representative or retention specialist may back down and offer you a new contract at a lower rate. If the representative holds firm, you may simply have to cancel service and move to a new provider.

If you do not have a choice of Internet service providers in your area, you may have to be more persistent. Don't give up when talking to the company and you may even want to post your grievances to social media, such as Twitter and Facebook. If you have access to the Internet at your workplace, you may even want to cancel your services altogether, relying on your mobile data plan for Internet and entertainment at home. After a month, call the telecommunications provider and ask to sign up for an Internet-only deal.

The High Cost of Streaming Services

Another consideration is cost of streaming services. Services like Hulu and YouTubeTV, both of which offer live and on-demand programming from a range of networks, can cost upwards of $60 per month. While this is cheap when compared to many cable plans, it is an expense that many households may have trouble meeting. It is also true that these services are very comprehensive but some streaming networks may only be available at an extra charge.

If you opt to stick with the free streaming available through your Internet company, you may still find yourself subscribing to multiple on-demand streaming services such as Netflix. The cost of several subscriptions can add up, reducing your savings.

Alternatives to Cord-Cutting

Despite some of the hidden costs and disadvantages, many people are happy with their decision to discontinue cable service. These individuals are usually those who took the time to understand their options, select streaming services that met their needs, and have up-to-date smart TVs that seamlessly stream content. (There is, of course, another subset of cord-cutters who simply decided to give up TV watching or who opted for local broadcasts plus mobile streaming or DVDs.)

If you aren't sure whether cord-cutting is right for you, there are a few things that you could do to reduce the cost of your cable service:

Switch Providers

As noted above, switching cable companies to take advantage of promotional deals can be an effective way of keeping costs down. This option has its drawbacks, however: Cable companies have a reputation for making cancellation difficult and time-consuming: You have to call to cancel and you will be directed to a "retention specialist" who will attempt to derail your request by asking a lot of questions and trying to persuade you to stay with your provider.

After cancelation, you will have to return your cable box and other equipment. You may also have to schedule a technician visit from your new cable company to connect you to your new service.

Another issue to consider is that once your promotional deal with your new provider expires, you may find yourself paying a high rate for cable service. You'll have to decide if regularly switching providers is a cost-effective option.

Negotiate a New Rate

Another option is to contact your cable company and request that they extend your current promotional package or reduce the amount that you are currently paying. Prepare to be tenacious, however, as many cable companies resist making these concessions. Threatening to cancel all of your services, including Internet, landline phone or home security service may work, though most customer service representatives are used to this tactic and discount it when speaking with you.

Downgrade Your Service

Another option is to see if your cable company is willing to downgrade your service package. This can be done in one of two ways:

1. Downgrade your cable package. If you have a huge number of channels, as well as premium options, consider whether you need such a huge selection. There may be a basic package available that meets your needs but at a lower price point.

2. Reduce your Internet speeds. If you want to keep cable and your household doesn't do a lot of gaming or streaming, you do not need the "blazing fast Internet" that you are currently paying for. Do some research on appropriate speeds for your household and ask your provider about downgrading your speed. You may be able to save a significant amount of money each month from this change alone.

The Final Word

Cord-cutting savings can be considerable if you take the time to understand your entertainment needs. Unfortunately, many consumers don't do this and end up having to spend a great deal of money on streaming services that end up approaching the monthly cost of cable. Research local options and learn about the capabilities of new smart TVs before making a decision to cut or re-start cable service.

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