Mobile phone Guide

Pay-monthly mobile phone tariffs

By Seamour Rathore seamour@consumerchoices.co.uk

Is it worth signing up for a pay-monthly contract with your mobile phone company, or safer to stick to pay-as-you-go?

Signing up for a mobile phone contract will mean you are tied-in to your supplier for at least 12 months – although 18 and 24-month contracts are becoming the norm.

Long contracts may bring benefits, but you won’t be able to break the contract without financial penalties. So, if you find you’re not using all the minutes or texts you’re paying for, you’ll be stuck.

Similarly, you may find yourself tied-in to an uncompetitive deal while new tariffs, more suited to your needs, hit the market.

What is included in a pay-monthly contract?

A pay-monthly contract includes a set monthly amount of calls and texts. Some tariffs have built-in flexibility – you get a certain amount of credit which can be used for any combination of calls or texts. Others don’t have this flexibility.

While you will get inclusive calls and texts with a pay-monthly tariff, certain calls will not be included in your monthly allowance. These could be calls to premium rate numbers, for instance phone lines for booking gig or theatre seats, or the customer services centre at your energy provider.

You may find that you get an inclusive amount of internet use with a pay-monthly tariff, but in most cases, if you want to use the internet on your mobile phone, you will be charged according to what you use, which can work out to be pretty expensive. The alternative is to sign-up for an additional internet usage tariff. These tend to be in the region of £5-6 a month and will include a set amount of data usage or will be unlimited with a fair use policy attached.

Why sign up for a pay-monthly contract?

Better handsets: One of the main perks of signing up to a pay-monthly mobile contract is to benefit from a free or discounted handset and keep up with the latest developments. Indeed, in the early days of release of a funky new handset it may only be available on a pay monthly tariff rather than pay-as-you-go.

Cheaper out-of-plan calls: Costs for calling abroad or premium lines are often cheaper on pay monthly compared to pay-as-you-go tariffs. But don’t take it for granted –you should check the terms and conditions of your contract.

Loyalty discounts: As a loyal pay-monthly customer, you may find that you’ll be offered significant discounts as your contract nears expiry and comes up for renewal. These discounts could include a reduced monthly charged or a free or discounted handset from the latest range.

Downsides of a pay-monthly contract

Long contract: This is the major downsides of a pay-monthly package. If you sign-up for an 18-month, 24-month or even 36-month contract, chances are that something cheaper and with more features will come along during that time. The trade-off for entering a long contract is generally a lower monthly fee than a similar package would work out on pay-as-you-go. So you’ll have to bite the bullet and make a decision if you’re prepared to take the risk.

If you want one of the latest smartphones, such as the iphone or an Android, you’ll find that they are largely sold on at least 24-month contracts. This gives your network time to recover the cost of the handset through your monthly tariffs.

If you’re looking for a halfway house, you should consider a sim-only deal which offers the chunky minutes and texts of a conventional pay-monthly deal but the cost is much reduced as a handset isn’t included in the deal. Additionally, these are usually sold on 1-month contract terms.

So, if you’re happy with your current phone, but nearing the end of your contract, these are worth looking into. In the last year, sim-only deals have rocketed in popularity due to their much larger call and texts allowances than pay-monthly deals sold with a phone.

Lack of flexibility: Once you’ve signed up for a pay-monthly contract, you will have to pay the agreed monthly fee whether you use the service or not. Your unused minutes and texts allowances won’t roll over to the next month.

Compare pay monthly tariffs