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29 October 2020

How to buy the best mobile phone on contract

Whether you're a download-addicted smartphone owner or just want to make the odd call, we'll help you get the best-value phone deal.
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Hamse Yusuf

Choosing a phone contract requires careful planning – especially when you consider you'll likely be tied to it for years. 

The option that's best for you will depend on how much you use your mobile for calls, texts and internet browsing, and how often you want to upgrade to a new handset. 

If you're trying to choose which network to sign up with, we can help make sure you don't get stuck with terrible customer service. 

Looking to buy a phone outright and pick up a Sim-only deal? Browse all the best mobile phone deals.

Should you buy a phone on contract or Sim-free?

The first question you should ask is whether a contract is the right choice. Often, they can work out more expensive in the long run, but of course the monthly payments could be more manageable. Our phone contract calculator can help you decide whether to buy a new phone on contract, or pay for the phone outright and buy a Sim separately.

Pay-monthly (contract/PAYM) mobile phones

With a traditional pay-monthly contract, you pay a fixed minimum monthly fee by direct debit, which is made up of paying for the phone (usually through a credit agreement, meaning you get credit checked) and the sim deal itself, with an allowance of calls, texts and data. You'll have to commit to a period of time, typically two years.

Depending on the deal you select, there may also be an upfront fee you pay for the device, which is something worth considering if you are set on a contract deal.

What are the advantages of monthly contract deals?

  • Free/cheap phones – with a monthly contract, you'll get a wide choice of free or subsidised mobile phone handsets, ideal if you fancy an upgrade.
  • Good value – paying in advance for a fixed amount of minutes, texts and data can be much cheaper than topping up a pay as you go phone.
  • Hassle free – you’ll never get cut off because you’ve forgotten to top up your credit.
  • Can build your credit score – Paying off a mobile phone contract monthly can be a good way to build your credit score. Bear in mind that missed payments or defaulting can make your credit score drop sharply.

Are there any drawbacks with pay-monthly deals?

There are a few. As mentioned, you may end up paying more overall – you'll need to weigh this up against the appeal of a lower upfront cost. 

Pay careful attention to the length of the contract. Most last two years, but some can last three, in order to keep the monthly cost looking attractive. You should also make a note of when your contract ends. Some providers may continue to charge you the full monthly cost, even after your contract has been paid off.

If you exceed the minutes, messages or data in your bundle, additional charges can be significant. It's especially important to be aware of this while roaming. Most providers now set a default 'cap' to prevent this, but if you remove it in order to continue using your phone, costs can quickly spiral out of control. For more, read our guide on how to keep track of your minutes and data, and our guide on EU roaming and international calls.

What else do I need to consider?

Picking the right network is important – get it wrong and you could be stuck with it for two years. To help you choose the right network, every year we ask thousands of mobile phone customers what they think of their provider. This survey is the largest of its kind in the UK – to see the results, read our guide to the best and worst UK mobile networks

You'll also need to pick the right bundle, and know how many minutes, messages and how much data you typically use. Have a look at your previous mobile bills as a guide, and try to find a deal that matches your typical usage. Remember – the cost of calls, texts and data that exceed your inclusive minutes can add up.

If you find that you've over or underestimated how much you need, contact your provider. You may be able to switch to a different deal, though it's less common to be able to downgrade. 

Sim-only mobile contracts

A Sim-only deal is where you pay for a provision of a set amount of minutes, messages and data on a Sim card, which you'll then use with to a phone you've bought separately. Sim-only deals are usually available on a rolling monthly contract, or a 12 or 18 month contract. Monthly contracts offer more flexibility – you can change the bundle or even the provider fairly easily. Longer contracts may offer cheaper prices, or additional perks. 

Often, it is much more cost-effective to pay for a phone upfront and get a Sim-only deal, if you have the spare cash. If you are in the market for a Sim-only deal, our guide to the best deals on mobile phones can help you find a good value handset and the right Sim.

Pay-as-you-go (PAYG) mobile phones

An alternative to a monthly Sim-only plan, though due to falling Sim prices this is less common than it used to be. There's no fixed monthly fee to deal with, instead, you pay for your phone use by topping up mobile credit in advance. Once you've used up all your credit, you won't be able to make outgoing calls or texts until you top-up again.

A pay-as-you-go deal is best for light users, but heavier users will be better off buying a bundle of minutes, texts and data. Our table below highlights the standard PAYG costs for major providers which still offer basic pay as you go services.

What are the advantages of pay-as-you-go?

  • No nasty bills – because you can only use pre-paid credit, you won’t get any unwelcome surprises.
  • No contract – you can walk away whenever you want.
  • No credit check – appealing if your credit history isn't the best.
  • Available to under 18s – unlike pay-monthly contracts.

Are there any drawbacks with pay-as-you-go?

Yes. You'll probably have to pay full price for a handset upfront, which can be expensive if you want the latest smartphone. It can also be inconvenient to run out of credit unexpectedly, and have to top up.

If you've decided that a pay-monthly deal is right for you, then your next step is to pick the right smartphone – see our mobile phone reviews to get started.