It’s not hyperbole to suggest most of us are pretty dependent on our smartphones. But that dependency comes at an increasing cost. Tariff prices seem to rise every year, handsets are becoming more and more expensive, mid-contract price hikes are not uncommon. But what can we do about it?
We become financially savvy. We find the best deals and actually pay less for our monthly phone bill rather than more. Here’s how.
Renegotiate your tariff as soon as your contract ends
Never put off renegotiating your tariff or upgrading your handset when your contract comes to an end. If you do put it off, you could end up paying far more than you need to.
The cost of your handset is included as part of your monthly tariff, you pay for it over the course of the 12 or 24-month term. BUT, three of the big networks (EE, Vodafone and Three) don’t automatically switch you to a cheaper tariff when that term ends. So you’ll continue paying for a handset that’s already been paid for unless you take action. Millions of people have already been caught out by this, overpaying an average of £22 a month. Contact your phone provider around 30 days before your contract ends to avoid this happening to you.
Know your usage
When it’s time to negotiate a new contract, make sure you know exactly what you need from your tariff. You can find out your average usage by checking past phone bills, or by allowing a tool like Billmonitor.com to analyse them for you.
When you know your usage, you can find a deal that offers exactly the right amount of data, minutes and texts, rather than paying for more (or less) than you need. Don’t get talked into paying for heaps of data if you rarely use your phone for that purpose.
According to research by the aforementioned Billmonitor.com, only 30% of people use their full allowance of data, minutes and texts. So this is just another way networks are routinely overcharging people. Don’t let them overcharge you.
SIM-only or contract?
SIM-only is often the cheaper option, especially if you already have a functioning handset and you’re out of a contract. For less than £13 a month you can get all the data, calls and texts you need. Plus some other cool benefits like data rollover or cheap international calls if you look to some of the smaller providers.
Even if you need a new handset, you may find buying one upfront and going SIM-only is still much cheaper. Let’s take the iPhone XS as an example. Bought directly from Apple, the 5.8” model is £999. You can then buy a SIM-only deal with GiffGaff, which provides you with 4GB of data and unlimited calls and texts for £12 a month. Over a 24-month period, you’ll pay £1,287 for the tariff and phone. For the same phone on a very similar tariff over at EE, you’ll pay £150 upfront cost, and then £69 a month for 24 months at a total of £1,806. In this one scenario, you’ll save over £500 by choosing SIM-only.
Be sure to compare the costs for your handset and tariff of choice to find out if SIM-only or contract is the better option for you. And don’t rule out pay as you go either as for low usage it’s often cheaper, this guide tells you all you need to know regarding bundles, prices and credit expiry.
Insurance always seems like a smart option. As we’ve already demonstrated, the latest phones are pretty expensive and it’s wise to cover yourself in case of damage or theft.
However, it turns out buying insurance may not be the smartest option after all. With phone providers charging up to £15 a month for fairly restrictive policies you could find yourself spending a lot of money for nothing. Third-party insurers are generally cheaper, but they still don’t cover everything. And what if you never need to claim on the insurance? It’s an expensive safety net.
The alternative is to self-insure; put a little money away each month to cover you if you need to repair or replace your phone. That way, you get to keep your hard-earned money and use it exactly how you want. Plus if you pop it in a savings account, you might even make a little money in interest.
Avoid going over your data allowance
So you’ve got your new phone, negotiated a better tariff and you’ve decided to self-insure. Now you just need to make sure you don’t run up an unexpectedly high phone bill.
Exceeding your data allowance is really easily done, but it can be a very costly mistake. To save yourself from bill shock, take action right now.
First, set a data warning and/or a data cap. Some phones allow you to do this in settings, but for others, you’ll need to call your provider and have them set this up. Then download a free data compression app, these are great for making your data stretch further without costing you any more money. If you have kids and they like to play games on your phone, make sure they do so offline or on Wi-Fi only. And finally, set a password for in-app purchases so the kids can’t accidentally buy anything whilst using your device.
How much do you pay for your monthly phone bill? Do you have any tips to reduce the costs?
This is a collaborative post