Mobiles - Prepay or Contract?

The mobile phone industry is developing at a remarkable rate. As the popularity of mobile phones increases and technology advances, more and more handsets become available, offering a vast variety of features -, from polyphonic ringtones, to video messaging and internet access.

There are the various networks. The UK has seven major ones:

All offer a mass of tariffs intended to suit every last customer. And you can sign up to them everywhere from their own specialist shops, to your local supermarket and on the internet.

The choices you face when buying a mobile can be bewildering. But before you choose the make, style and colour of one of many dozens of handsets, the network, or the accessories (car charger, snap-on designer cover, bluetooth earpiece), you must decide how you will pay for your new phone: by contract or pre-pay/pay as you go.

Contract

With this method you sign up for a year’s use of a network. A free handset is included in the deal, which may also offer an extra few months as an incentive, meaning your 12-month contract becomes a 15-month one, or thereabouts. Once you sign the contract, you are committed to a deal that it is very difficult to renege on.

Each month you will incur a set monthly charge (tariff) and, of course, the cost of your calls, text messages and, if you have it, web access. You will receive an itemised bill each month.

If you take care in choosing the right tariff, you can get good value out of your phone by using all the free or low cost talk time, texts and access to your voicemail messages.

Also, with a contract phone, the price of calls is much cheaper. Connecting to another phone on another network can cost as little as 15p a minute, while doing the same from a pay as you go (PAYG) phone may be priced at as much as 50p per minute. And with a contract, you only pay for the time of your call. PAYG deals often round up the minutes and seconds to get more cash out of you.

Finally, your network will probably offer you a free or heavily subsidised handset upgrade at the end of your contract, as a lure to get you to sign up to another 12 months. That means you’ll be able to keep up with the latest mobile trends for little or no money.

Pay as you go

There is an initial outlay involved when you buy the handset. It can be anything from about £70 to several hundred. Phones that have been overtaken by more advanced versions can often be snapped up at reduced prices (though, being “old fashioned”, they aren’t so trendy).

From then on, the amount of money you spend is up to you – sort of. If you don’t use your phone for a month, you won’t have to pay a thing – no tariff charge or phone bill. If you do make calls, you can decide in advance how much you want to spend by topping up to a certain amount. You can do this in phone shops, most newsagents and supermarkets, or online in a matter of seconds.

However, calls from a PAYG phone can be pricey and that £10 or £20 you spent can be used up quickly. And access to voicemail messages is rarely free of charge. So, if you use your phone regularly, it might well be a better idea to sign up to a contract instead.

PAYG handsets are a good idea for children - who often have little idea of the value of money and the cost of calls - and people who rarely use their mobiles. But even if you only use your handset in emergencies, you could be expected to make a call at least one every six months in order to keep your connection to the network alive.

 

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