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Verizon Unlimited Data Plan Costs Credit Card Users More

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verizon unlimited data rewards

Lost in the buzz over the surprise announcement that Verizon Wireless will begin offering unlimited data plans again is an important limit in the fine print: Customers can’t get the best price if they pay by credit card.

That caveat effectively adds cost to the unlimited plan for those who like earning credit card rewards and benefits for charging wireless phone service to their cards. They will have to either forgo rewards or accept Verizon’s undiscounted price, which costs an extra $5 per month for a single line and $10 per month for multiline service, plus taxes that apply to that higher amount.

“You can certainly pay with a credit card, but the discount doesn’t apply,” said Verizon Wireless spokeswoman Kelly Crummey. She said she had nothing to share regarding why Verizon made that pricing decision.

» MORE: NerdWallet’s best unlimited data plans 

However, NerdWallet credit card expert Sean McQuay has an idea. “Credit card acceptance is expensive for merchants — often ranging from 2% to 3% of every transaction,” McQuay said. “Verizon is hoping to protect its profit margins by limiting payment acceptance to much cheaper options: check and debit cards.”

Getting the advertised price on the new Verizon unlimited plan requires enrollment in its “autopay” feature and payment by “checks or debit cards only,” according to offer details. Autopay for other Verizon Wireless service plans allows credit cards. That means additional math for some customers considering how to pay for the unlimited plan.

For example, the Citi® Double Cash Card – 18 month BT offer gives you 1% cash back when you make a purchase and another 1% when you pay it off. That’s $48 a year in lost rewards for a family that charges $200 a month for Verizon unlimited service. In that case, though, the Verizon discount would be larger: at least $120 a year for the $10 monthly multiline discount.

But it’s a wash for a customer paying the same $200 a month with the SimplyCash® Plus Business Credit Card from American Express, which gives 5% cash back on U.S. wireless phone service spending. (The bonus rewards on that card apply to the first $50,000 in combined bonus category purchases per year, then 1% applies thereafter.) Those rewards would come out to $120 a year.

Other cards offering elevated rewards on cell phone service include the Ink Business Preferred℠ Credit Card, which gives you 3 points per $1 spent on such purchases. And consumer credit cards from Wells Fargo offer up to $600 in cell phone protection if the wireless bill is charged to the card.

“When you compare the price of cell-phone plans, don’t forget to factor in the potential credit card rewards,” McQuay said.

Gregory Karp is a staff writer at NerdWallet, a personal finance website. Email: gkarp@nerdwallet.com. Twitter: @spendingsmart.