Mobile phone users in the UK are wasting about £160 a year by being on the wrong contract, according to a new report. Furthermore, 90% of those with a mobile are losing out this way.
Overpaying subscribers tend to either be on contracts that give them more minutes and data than they use, or on contracts with limits they regularly exceed, which means they rack up extra charges each month. The latter group tend to be the biggest overspenders.
Having analysed 400 “representative” contracts, the consumer data firm ctrlio (it’s pronounced “controleo”) says we could be collectively wasting £6bn a year. It named EE as the worst mobile provider for “contract fit”, while independent provider giffgaff was the company with most customers on the right deal.
In short, the survey found that if you’re on an 18- or 24-month deal that has expired it’s likely you are overpaying each month. Here’s an action plan to make sure you avoid this scenario.
1. Check your real usage
The ctrlio report was issued to promote the firm’s bill comparison service, which it says will work out the best contract for you. It is similar to a rival service offered by another firm featured in Guardian Money in the past, Bill Monitor.
Both firms ask for your provider account details and password. They will then access your phone account and examine your recent bills to come up with your actual monthly usage – and the best deals to switch to, for which they will earn a commission. Check both firms (it doesn’t take long) to see whether the results tally, and then compare the deals on offer.
2. Consider going sim-only
If you carry on using an existing handset after a contract expires you could be £246 a year better off if you switch to a sim-only deal, ctrlio says. Once you have an unlocked handset there is nothing to stop you replacing the existing sim card with one from a cheaper rival. You can still keep your existing number.
There are some great sim-only deals from £7.50 a month which will be more enough for light users. Money particularly likes giffgaff and Tesco Mobile, both of which operate on the O2 network. There are a range of deals, but for £7.50 you get 250 minutes of calls and 500MB of data, which should be enough to cover basic email and occasional internet usage – but if you are a YouTube fan you’ll soon bust that limit. For heavier data users Tesco has a sim-only deal with 2GB of data and 750 minutes of calls for £12.50 a month.
3. Ask your home phone provider
If you are an existing TalkTalk, Virgin or BT home phone/broadband customer, they all have competitive sim-only deals. BT’s deal offers 200 minutes and 500MB of data for just £5 a month, while TalkTalk is offering 250 minutes and 650MB per month for just £3.95 – both come with a 12 month contract. Virgin Media customers can get similar deals, the pick being its £8 per month sim with 1,250 minutes of calls and 500MB of data. Sky doesn’t currently offer such deals, but will do so in 2016, it says.
4. Haggle with your provider
Ring them up and to tell them you are moving to, say, Tesco Mobile and you may find a much better deal is mysteriously offered up, particularly if you are out of contract. The big players rely on the fact that many customers want to upgrade their handset every 18 months; if you’re not happy playing that game, do a deal. If your existing provider can’t come close to what is being offered by Tesco, then make the move.
5. Consider an outright purchase
It can be cheaper to buy a phone outright with no contract from the likes of Carphone Warehouse and opt for a sim-only deal. Decent smartphones that do nearly everything you need can now be bought for just £70-£90 depending on what you want. Why tie yourself to a £42-a-month contract for two years to get an iPhone 6s when you can buy a decent 4G smartphone for £99 and get a £7.50 monthly sim?
