New Year Financial MOT: It’s Good to Talk….ideally with a cheap Mobile Phone Bill!

Hello everyone! This is part of a series around New Year being a great time to review some of those regular household bills that we just don’t think about so much – like for you mobile phone!

It’s amazing just how much the mobile phone has become part of our day-to-day lives – did you know that what you’ve got in your pocket is likely to be considerably more powerful than the computers that put Man on the Moon? Genuinely amazing.

Phones have stopped being just something you make calls on and become something of a “do-everything” device – but prices and contracts have both skyrocketed in the last couple of years as phones become both cutting edge but also use rather rare minerals in their manufacturing.

The market is an interesting one and definite ground for challenging our spending – most of us would not really consider going and buying a new PC or games console every 2 years. When the “contract model” of phones took off we became very used as consumers to always having the latest, and that mindset has never really gone away.

Firstly, are you still in contract? If not, switch deal immediately.

The absolute first thing you should do is check what deal you’re on. When you get a new phone the price of the handset is usually built in to your monthly deal, so you’re paying off the cost each month. Astonishingly approximately 4m people in the UK in 2018 were still paying a high contract even when the phone was effectively “paid off”.

It’s easy (and very convenient for the mobile companies) to forget this is the case and let you carry on paying every after completion. Often switching to a SIM-only deal will get you much more data/minutes at a cheaper price.

Note that the majority of the networks signed up to a voluntary code moving you on an “equivalent” SIM only deal, but….

a. This is voluntary and doesn’t apply to all networks

b. That deal they switch you to may not be best for you – so worth a review.

If you do go SIM only consider a smaller provider

Some of the best deals to be found when going SIM only are with smaller providers and well worth considering. Whilst these aren’t holdhold names these companies effectively rent use of the networks of the big providers. So with SMARTY for instance you’re actually using O2’s network – but owing to the small nature of their infrastructure they keep costs low. I recommend ID Mobile, SMARTY, TescoMobile and GiffGaff for these. In terms of the bigger providers, I’ve found some excellent deals with Three and Vodafone in particular amongst the bigger networks.

Challenge if you really need that phone

Working near a Westfield shopping centre, I was amazed at the amount of people queuing up outside the Apple Store for the iPhone 11 – I didn’t realise this was still a thing! I asked a few people in the queue why they wanted the phone and the answer generally focused around the newness – interestingly no-one mentioned the features.

People queuing up for an Iphone in Westfield

Unless you can honestly say you work in an industry where “social proof” is important and people will actively judge you on having the latest tech (and this does not apply to 99% of you!) newness is not a good reason for spending a large amount here, especially given how quickly phones advance and how fast that new factor will wear off after a couple of weeks.

I suggest an effective approach is to total the lifetime contract of the phone – if you’re spending £48 a month on a two year contract, ask yourself if you’d rent a PC for 2 years for £1,152 with the same features? Do you already own a separate camera which takes better pictures? Do you need that slightly sharper screen? If not, go for a cheaper alternative.

I’m not saying don’t spend here – I’m saying just make sure whatever you’re buying is worth it for you.

Consider buying outright…..but don’t rule out a longer term contract.

Building on the “challenge if you need it by considering total cost” approach above, if you can afford it you can sometimes save money by buying the handset outright and getting a good SIM only deal. Surprisingly, I found that whilst I was usually getting more data/mins going down this route making it arguably better value, for a low-cost/lowish use approach I wasn’t finding the savings were that significant, so it’s worth doing some comparison rather than just assuming.

Always compare and contrast

Yes yes, who’d have thought that this would come up on a finance site? There really is so much variation between what mobile providers offer you though that this is an area that it really pays to do your homework. Despite high street stores frequently advertising one-off specials and “good deals.”

I have personally consistently found the best deals online, particularly with mobiles.co.uk and mobilephonesdirect.co.uk.

It’s also worth keeping an eye on Amazon if buying a handset directly – in recent sales they’ve had some quite steep discounting on handsets including Apple models.

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