How a SIM only mobile phone arrangement can work out considerably cheaper than a contract over a two year period especially if using a reconditioned phone.
You Can Save £500 By Avoiding Expensive and Lengthy Contracts with Flexible Option
The promise of a subsidised phone and the ease of renewal often keeps mobile phone users on lengthy, binding contracts but it pays to look at the overall costs of your phone over the longer term and consider alternatives.
It’s highly likely you could save considerably by going SIM only and maybe foregoing the very latest tech and opting for a pre owned phone to save even more.
SIM only versus a contract
There are various benefits in opting for SIM only:
Contracts – most mobile phone contracts are over two years so you’re ‘locked in’ with that network provider and the particular tariff you’ve signed up for during this period. Indeed, your tariff may even increase as network providers often raise prices in line with inflation during the course of your contract length.
You will likely be entitled to a new, subsidised handset but how much it will cost is linked to the monthly tariff you’re paying; the higher the tariff, the lower the initial cost of the phone.
At the end of the contract, it will carry on at the same rate as before unless you take out a new one by upgrading your phone or similar.
SIM only – you’re only paying for the network service so there’s no subsidised handset; you’re free to use your existing phone (for example if you’ve gone out of contract and wish to keep the handset), buy an unlocked phone or one already locked to the network for which you’re going to take out a SIM only arrangement with.
SIM deals usually run for a maximum of one year or you can choose a 30 day agreement leaving you free to change your deal at a month’s notice although yearly SIM only deals are usually a little cheaper.
As you are less committed to the network provider you can benefit more readily from improved network offers and rates, and are free to use whatever phone you like.
The trump card for a SIM only arrangement is often the considerable cost savings you’ll make over a contract, especially if you’re happy to use a modern smartphone that isn’t the current model. For example, you could buy a refurbished Samsung Galaxy S6 for around £120.00 as opposed to forking out over five times as much for a more recent model such as the S9.
The following example illustrates the type of cost savings possible based on buying a refurbished S6 as above:
Cost of refurbished S6: £120.00
SIM only monthly tariff: £15.00 (£360 over two years)
Total cost over 2 years including handset: £480.00
Assuming free handset is part of the deal.
2 year contract at £38.00 per month (around the cost for a contract where a new Galaxy S9 would be free)
Total cost over 2 years including handset: £912.00
It’s clear the savings on SIM only can be considerable, and bear in mind even at £38.00 per month not all smartphones will be free – there may be something to pay for your desired phone so bumping costs up further.
Also, the SIM only option could work out even cheaper than the example above over two years as it’s possible that after year one a better value SIM deal may be available. The fact you’re only committed to one year means you could take advantage of a better deal sooner than someone on a two year contract, and if you take out a monthly SIM deal then you can change tariffs even more frequently if you wish.
Always compare costs over the life of a contract
It’s easy to become fixated on monthly costs and how little the brand new phone might cost on a contract, but it clearly pays to compare your options over the life of a (usually) two year phone contract.
If you’re happy to not necessarily own a latest model phone – and they only stay ‘latest’ for barely a year nowadays – then SIM only with a refurbished phone such as the still highly thought of S6 makes a convincing case for itself.