Pay as you Go vs Phone Contracts

When it comes to choosing a new phone, there are lots of options out there. One of the first things you will need to think about is whether you want to have a contract or pay as you go phone deal.

Last updated: 4th Jun 2019 at 11:08am

You may want to have flexibility when it comes to a phone plan and prefer to be on a pay as you go. A pay monthly contract deal can last for up to 24 months and you are guaranteed a new phone, however, they are usually more expensive. Here we take a look at the advantages and disadvantages of both options.

Why choose pay-as-you-go?

There are some people that would be more suited to a pay as you go option, some of the advantages of pay you go include:

  • Low cost 
  • No large bill shock
  • No credit check
  • Flexibility

A pay as you go plan is ideal for those who want flexibility and don't like to be tied down to lengthy contracts. PAYG is great for both heavy and light mobile users. People who don’t use their phone as often can opt for a small bundle, saving money but suiting their needs. Whereas heavy users can choose a bundle with mountains of data, minutes and texts.

If you use your phone for browsing and chatting with friends, an unlimited text bundle could be a good choice.  Pay-as-you-go SIMs are available with a 30 days rolling plan with a bundle, or where you pay for what you use with top-ups (recommended for light users).

Choosing the right option when it comes to pay as you go will depend on your usage and phone preference. Generally, light users or users that prefer to buy their phone outright find pay as you go better.

Why choose a pay monthly phone contract?

There are a few advantages to going down a contract route when looking at mobile phone deals. Some of these include:

  • No upfront cost for a new phone
  • New phone cost spread over 12 - 24 month
  • Upgrade deals
  • No need to remember to top up

A new smartphone can be an expensive purchase and this cost can be incorporated into the deal when signing a new contract. The price of the phone is usually added to the monthly bill so you pay for the device throughout the duration of your contract. Pay monthly deals can run for one year or 24 months. When signing up to a 12 month or 24-month agreement, there will be a termination fee or charges if you decide you want to switch network or change deal within the contract term.

As a monthly contract customer, you will be eligible for an upgrade once the term of the agreement is complete. Mobile networks are keen to retain their existing customers and will usually offer a fair deal on a phone upgrade. But with new phones getting more technical, monthly deals are getting increasingly more expensive. An upgrade for the latest phone can cost £40 plus per month depending on the allowances and phone specifications.

If you come to the end of your agreement and want to keep your phone, you could switch to a pay as you go SIM.

One of the most convenient aspects of a pay monthly contract is the fact that you don’t need to top up your account to send texts and make calls. You will be able to use the phone whenever you want to browse the web, chat over messaging apps, or make calls and texts. All of this will be available to you without having to remember to top up your balance.

Monthly contracts include a monthly allowance of calls, data, and texts. If you happen to go over the bundled allowance any extras are charged at a set rate. If you do use your phone a lot this could be the option that is more suitable for you.

Choosing the right mobile plan

The right mobile phone plan for you will depend on a number of different things:

  • Average usage
  • Current phone
  • How long you want a contract for

Phone contracts usually run for 12 or 24 months and this can be a concern for some people. If you don’t like the idea of being tied to a long agreement, pay as you go option is more flexible. While a pay monthly agreement may seem expensive, with this option you will be able to enjoy the latest smartphones.

If your current handset is still working and you would prefer to keep it, you could go for a SIM only deal, this will save you a lot of money. This type of monthly agreement gives you a new SIM card when changing network if your device is unlocked you can use it in your existing device.

Another option for signing a new monthly agreement at a lower cost would be to choose a slightly older model of phone. The very latest flagship devices can be very expensive, opting for the model that was released before the current one can save a significant amount of money.

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