Slash your smartphone bill
“The real problem facing most UK smartphone users is that they are overcompensating for the amount of data they use by having a much too large data allowance – not only wasting their data allowance, but, as they could be on a smaller one, wasting money.”
To avoid being caught out, many people look to unlimited data deals, which are often the most expensive. “If you look around for tariffs that don’t have unlimited data, increasingly these tariffs have the most value in them,” says CCS Insight’s Collins. “Although unlimited [plans] are attractive, in reality very few of us go above 2GB of data. There’s normally a significant premium on moving to unlimited data from limited.”
Still, it’s easy to see why people worry. While customers who exceeded their contracts accounted for only 10% of the bills in billmonitor’s report, these people faced steep excess charges – an average of £276 annually.
The real problem facing most UK smartphone users is that they are overcompensating for the amount of data they use by having a much too large data allowance
All the more reason to plan ahead. On Vodafone, upgrading from a 2GB-per-month contract to a 4GB-per-month contract adds £5 to the monthly bill, but adding a one-off data “boost” of 2GB costs £10 – in other words, the price doubles if the extra data isn’t included in your contract.
If you exceed your cap and keep using data, you’ll be charged a whopping £5 for each 250MB, a quarter of what you’d receive with the “boost”. Tracking your data use – and paying attention to the warning messages sent by your operator – is an easy way to get more for your money.
Avoiding contracts altogether and choosing a pay-as-you-go (PAYG) approach can have benefits, but you’ll need to be careful.
“It’s a better way to control your expenditure, but it’s not the cheaper way to use your phone,” says Collins. “If you look at price per minute, price per text and price per megabyte in pre-pay, generally it’s more expensive.” You’ll also need to make sure you keep your phone topped up, although automatic top-ups have made this easier.
A more economical option is to buy the phone and SIM separately. “Increasingly, the grey area of SIM-only is offering so much value compared to PAYG and consumer [contract packages] that we are seeing a growth in people buying phones separately from SIM cards,” Collins notes.
If you want a specific handset, one of the cheapest ways to get it is to buy it without a contract and find a low-cost SIM. If you’re worried about signing up to a contract, most operators offer SIMs on month-to-month deals, offering flexibility and lower prices.
Buying a handset outright puts you in a great position to save money. “SIM-only contracts offer some of the best value,” says Collins. “If you work on the cost of ownership of putting a SIM into a phone, [buying upfront] is generally cheaper over two years, and you’ll get more data, texts and minutes. Unfortunately, most people don’t have £500 upfront, so they’re going to choose a subsidised version.”
If you can’t afford a new handset outright, shorter contracts can reduce your costs, potentially saving you hundreds over two years. Look at EE: buying the Samsung Galaxy S4 on a £56-per-month, two-year contract offers 8GB of data per month.
Over the full two years, including an upfront fee of £20, the total cost of ownership reaches £1,364. With a year-long contract, you’ll have to pay £70 upfront and £66 per month, but you only end up paying £862 over the length of the contract.