How to Save Money on Your Phone
and Phone Contract

See also: Saving Money on Your Car

Most of us now see a mobile phone as an essential part of life. Certainly, few of us could manage without one. However, just because it is essential does not mean you have to resign yourself to huge bills. It is perfectly possible to take action to save money on both your phone and your phone contract without making huge sacrifices to your connectivity.

This page describes several ways that you can start to reduce what you are paying upfront and on a monthly basis for your smartphone and your payment plan.

Getting a New Mobile Phone

Getting a new mobile phone handset is never going to be cheap. However, there are ways that you can reduce the cost.

  • Consider getting a cheaper model than you were planning. You don’t really need the latest iPhone, even if you want it. Last year’s model—or even a different and much cheaper phone altogether—is likely to do everything that you need, and probably more besides.

  • Try a refurbished phone. If your chosen model is still out of reach, consider a refurbished version. These are phones that may have been pre-owned, or had a fault repaired. You need to be a bit careful about these, and make sure that you buy them from a reputable seller and get a warranty. However, they can offer a way to own a more expensive handset at a rather cheaper price.

  • Do your research. Find the cheapest way to buy the phone that you want. That might be as part of a contract—but it is much more likely to be cheaper to buy the phone separately, and then get a SIM-only contract (see box). You should look at prices in stores and online retailers that are not connected to networks, because they often have much better deals on handsets than the networks.

    SIM-only or handset included?

    Over and over again, SIM-only deals have been shown to be the cheapest available—and not just because of the cost of the handset.

    It is almost always cheaper to buy your handset separately, and then get a SIM-only deal.

    However, what if you can’t afford this? The best option is to save up until you can afford the handset, because it reduces your monthly bills.

  • Keep your current phone. Yes, really. If your current phone is functioning acceptably, why not keep it for another year or so? You will save yourself the cost of a new phone for that long, and you can get a SIM-only deal for the year that will be considerably cheaper than an all-in package. Upgrading only when you really need to upgrade, not when a new phone is available, will save you a lot of money in just a few years.

Checking Your Contract

A ‘mystery shopper’ exercise by the UK’s Citizens Advice in 2016 found that mobile phone sellers consistently recommended tariffs that provided far more than buyers actually needed.

It is therefore a good idea to check that you are on the best contract for you. There are three aspects to this: data, calls and texts.

First, do you really need that much data? Unlimited data sounds great, but most of us don’t really need that much. In fact, few of us actually use more than about 2 or 3GB per month. Log into your account online and check your usage, or find a website that offers free checks. If you’re paying for data you don’t need, you could consider a downgrade of your contract.

It is also worth having a look at what you’re paying for calls and texts. You may be able to change your usage to fit within the terms of your contract and avoid any extra charges, for example, by texting instead of calling.

It is also worth being aware that many providers offer additional free minutes to mobiles from the same network. If your whole family is on the same network, this can make communicating considerably cheaper.

Upgrade or downgrade?

If you contact your phone provider to change your contract, they will probably want to sell you a more expensive plan, an upgrade.

However, you may already have discovered that you don’t really need an upgrade. In fact, what you need is a downgrade.

Do your shopping around ahead of time, so that you know what you should be able to get for the price you want to pay. Use price comparison sites to find out how cheaply you could get what you need. You may need to be firm with your provider that you don’t want to pay more.

If necessary, tell them that you plan to switch, as you will then be put through to the retention team. They may be authorised to match other deals—and maybe even offer you a sweetener. They also often have access to deals that are only available to existing customers.

It should also go without saying that you should check prices every time your contract comes up for renewal, or you reach the end of the agreed charging term (usually one or two years), and there is no longer a penalty for moving.

Tell your provider that you are thinking about switching, and you may find there are new and better deals available to you. However, shop around too, using price comparison sites, just to make sure that you really are on the best possible deal.

Pay monthly or pay-as-you-go?

Should you opt for a monthly contract, or should you choose pay-as-you-go, where you only pay when you actually use the phone?

This used to be a fairly simple decision: if you only used your phone occasionally, pay-as-you-go was cheaper. Once you used the phone more, a monthly contract would be better.

However, smartphones have changed the game a bit, and it is now much harder to get a reasonable pay-as-you-go option. Some providers require you to buy a minimum amount of data each month, and also do not allow you to keep any unused data. This means that you are effectively on a contract, but without any of the benefits. It is therefore worth looking into all the options carefully to see what is best for you.

A very cheap contract where you keep your unused data (and some are less than £8 per month) would be better than a mandatory top-up of £10 per month, with no data rollover.

Avoiding Unexpected Add-Ons on Your Bills

It is always a nasty shock to find an unexpected charge on your phone bill—even if it’s only a few pence for a picture text that someone sent you.

It can, however, be a disaster if you find that you have been charged considerably more than you were expecting. This can happen if, for example, your children have been buying things within a game, you called numbers that were not included in your payment plan, you were sending competition entries by text, or you simply forgot to connect to the wifi on holiday.

There are actions you can take to avoid being caught out like this, including:

  • To avoid text charges, shift to a messaging app like WhatsApp, which does not charge for text messages.

  • Avoid any calls to premium numbers (in the UK, these are numbers that start 09, 0871, 0872 and 0873), as these are unlikely to be included in the terms of your ‘unlimited’ calls.

  • Check any games that your children are playing and disable in-app purchases. Also explain to your children about the costs of buying things within the game, as they may not understand.

  • Set a cap on your data usage, so that you cannot go over your allowance. It’s also a good idea to have a reminder when you are within a certain amount of it, as you can then reduce your usage or buy more data on a plan, rather than paying punitive charges. This is a bit like the difference between an arranged and unplanned overdraft on your bank account.

  • Turn off your mobile data. You can turn it on when you need it, but this will remind you to connect to wifi whenever it is available.

Avoiding Extras—and Using Them

When you start looking into your phone bill, you may find that there are some hidden costs.

You may be paying for extras that you didn’t even realise you were being upsold when you took out your contract. One of the most common is insurance.

Insurance sounds like an obvious thing to have, but you may actually find that you don’t need it. The first thing to consider is the value of your handset. If it’s fairly cheap, and you are usually pretty good at looking after your things, you might not want to bother. If you’re concerned, you could simply put money aside each month into a savings account. You will then be able to afford to buy a new phone if you need one—and if you don’t, you can spend the money on something else instead.

The second thing is if you have bought your handset outright, or if it is included in your contract. If the latter, you are likely to find that you have to keep paying for it even if it is lost or broken. Insurance can take the sting out of this and ensure that you have a phone when you are paying for one.

The third aspect is the convenience factor. If you are insured, you will be able to have a new phone dispatched immediately, without having to go and buy one. You may feel this is worth paying for.

TOP TIP! Shop around for insurance too!

Mobile phone providers offer insurance—but it may not be the best deal.

Shopping around for insurance can mean that you can get a better, cheaper deal. However, don’t just get the deal with the lowest premium. Check that it really offers what you need, including the right excess.

You may also find that mobile phone insurance is included in your household insurance or as a perk on your bank account. Check these carefully before buying a separate policy or taking out insurance through your provider.

The flip side of this is that you may find that you can get a contract that has some useful added extras. Some, for example, offer a free subscription to a streaming service for a few months. If this is something that you already use, it could save you money.

A Simple Process

Saving money on your mobile phone may seem complex, but actually it boils down to three main areas.

First, remember that SIM-only deals are almost always cheaper—and that you don’t really need the latest model of handset. Second, shop around, and don’t be lazy. Your current provider certainly won’t tell you that the best deal is elsewhere. Third, only buy what you really need. Following these rules should help you to reduce the cost of this essential part of life.