A Quick Guide to Mobile Phone Deals

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What You Need to Know

  1. With a ‘pay as you go phone’ you can only use credit you’ve already paid for. This means you’ll never have to worry about running up an unexpectedly high bill.
  2. As there’s no contract involved with a pay as you go phone, you don’t have to worry about being tied into a long term financial commitment.
  3. Contract deals will offer a subsidised or free handset. If you are after one of the top models available a contract can make things much more affordable, especially if you use your phone a lot.
  4. The longer the contract the better value you’ll get overall. If you’re happy to be locked into an agreement for two years, a 24 month contract can offer great value.
  5. Some providers will send you alerts to help prevent you from going over your contract’s monthly usage limits.
  6. If you already have the handset you want, a SIM only deal can provide you with a bundle of minutes, texts and downloads at a much lower price than a standard contract.
  7. With a SIM only deal, you can also switch between handsets as you choose.

With such a wide range of options available, it can be hard to know if any one mobile phone deal represents a great bargain or a rum deal, especially as what’s right for one person will be completely unsuited to another. Here we give you an outline of your options and run you through the key considerations to bear in mind before making a choice.

Pay As You Go (PAYG)

If you only make limited use of your mobile, a PAYG deal is likely to offer you the good value. However, you shouldn’t assume that PAYG will always be your best option. You need to consider the following;

The Handset You Want: With a pay monthly contract you will be offered a subsidised or free handset. Often these will be highly desirable models. With PAYG, you need to buy a handset outright at full price. If you’re fine with a basic piece of kit that’s not a problem (you can find models with limited functionality for as little as £5). However, if you have your heart set on something more expensive, PAYG may well be the least cost effective option for you.

For example, at the time of writing, buying a 65gb iPhone 5 direct from the manufacturer costs £700.00. You can get the same phone for free on a £30 a month contract that lasts two years. That comes to £720.00 and will provide you with unlimited texts, thousands and thousands of minutes and thousands of MB of data for essentially the same price, paid in small instalments.

Usage: You are also likely to find that as soon as you start to spend £20 a month or more on top ups, you’ll be better offer paying that sum as a monthly fee, as a contract will furnish you with more minutes and texts for your money, as well as offering a free or subsidised phone.

Of course there are other reasons to choose PAYG aside from cost effectiveness;

Freedom: With a contract, especially a long term one such as the 24 month example cited above, you are making a commitment that could be hard to keep up should your circumstances change. With PAYG you don’t need to worry about being tied in to anything.

Pay Monthly Contracts

Provided you choose an appropriate product, signing up to a mobile phone contract can save you money on your usage and give you access to a more advanced handset than you might otherwise be able to afford.

Rather than paying as you go you’ll just have to budget for a single monthly free which will cover you for a pre-arranged amount of calls, texts and (if applicable) data roaming. You will usually also benefit from receiving a free handset. In the case of the very latest models you may have to pay a small fee. In addition, you’ll never have to worry about leaving yourself short of credit and not being able to make a vital call.

When opting for a pay monthly contract your main points of consideration should be:

The Handset: This is usually the biggest financial draw of a contract so it makes sense to figure out exactly how much value you are getting from the subsidy towards your handset.

Minutes, Text and Data: If you naturally use up to your contracts usage limits you will be getting much better value than you would otherwise. However, if you over or underestimate on this you’ll be left worse off, as you’ll either pay for lots of minutes you don’t use, or you’ll rack up big bills. You also need to make sure the package matches your usage. For example, if you prefer calls and very rarely send texts an unlimited supply of them isn’t worth too much to you.

If in doubt it can pay to be conservative as, though many providers will allow you to change to a more expensive contract, few will allow you to downgrade to a cheaper option until the full term of your agreement has expired.

The Length of Contract: The longer you tie yourself into a deal, the more attractive the terms will be. Generally you’ll go have a 12,18 and 24 month option, with the comparative cost falling in line with the time span in question.

Caps: If you aren’t paying attention, it can be easy to exceed your limits and run up a bill you simply hadn’t planned for. ’Bill shock’, as it’s known, can be disastrous. Some providers are happy to place caps on your spending, whilst others will send out reminders to let you know if you’re pushing it fine. Others, however, simply won’t.

SIM Only Contracts

If you already have a great handset and aren’t interested in replacing it, then you’ve ruled out one of the biggest incentives to sign up to a plan.

With a SIM only deal, as the name implies, all you are provided with is a SIM card and a package of monthly minutes, texts and downloads. So, if you’ve reached or the end of a contract and aren’t looking to upgrade, or have received a handset you are happy with from another source, a SIM only contract will give you everything you need for a fraction of the price of a regular plan.

Furthermore, you can switch your SIM between any compatible handsets. Meaning if you need to switch to a back up phone for any reason (if, for example, you were heading off to a music festival you might rather leave your smartphone at home) you can do so whilst retaining the same package and calls and texts.

SIM only contract deals are now available from almost every major network. These days, there a few different types of SIM card out there, with nano SIMs (as used in the iPhone 4, HTC One and Nokia Lumina) and micro SIMs (as used in the iPhone 5) recently making their mark on the landscape. If you own a smart handset you can opt for a SIM only package that offer the right sort of SIM card.

Micro SIMs can be backward compatible with the use of a mini SIM adapter. This means you still have the option of switching to a wide range of handsets (indeed, you actually have more options than with a standard SIM, as you could use another smart phone, or a much older model.) It should be noted, however, that to date only the iPhone 5 uses a nano SIM.

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