Mobile Phone Buzz

Every mobile phone salesman will happily tell you in great depth why a pay monthly mobile tariff is better than a pay as you go one. They probably won’t tell you how much extra commission they’ll get from a contract sale: Pay monthly contracts are worth so much more to the networks, and there are heavy incentives to sell them. By comparison pay as you go sales are almost worthless.

So in honest terms, what are the advantages and disadvantages of a pay monthly mobile compared to a pay as you go one, for you, the customer? We break down the key points here.

Advantages of Pay Monthly

Pay Monthly contracts do indeed have a wide range of advantages over pay as you go:

• Lower price: the biggest advantage for signing yourself up to a pay monthly deal is the price. Pay monthly packages come with a varying arrays of complimentary minutes and texts. The more you pay on your monthly contract, the more free minutes and texts you will receive. Be careful to read the deal carefully though - the free minutes may not work when calling other networks, and will almost always only work when calling within the UK. They won’t include calls to premium rate numbers such as directory enquiries. Free texts again may have network limitations, and they may not include picture or multimedia messaging.
• Cheap data: if you want to browse the web from your phone, pay monthly is almost always the cheapest way to do it. Most pay monthly packages come with at least some internet browsing built in - your deal will specify how much you can use. Others will come with “unlimited” data tariffs, which in theory let you browse the web as much as you like. Be careful not to go too crazy with these though - they will be subject to a fair use clause, so if you use it ridiculous amounts (eg. by plugging in your laptop and downloading movies) you might end up with a hefty bill.
• The best handsets: usually the latest and most expensive handsets are only available with pay monthly contracts, and often these fantastic phones are completely free. Networks will often only release pay as you go packages for the latest models months after they’ve been made available on pay monthly, and usually for hundreds of pounds.
• International use: some networks won’t allow pay as you go customers to use their phones overseas. Be aware though that your pay monthly free minutes and texts often won’t apply to calls you make when you are abroad, and they will be charged at horrendous “roaming” rates - make sure you know exactly what it costs to make a call or send a text before you use your phone abroad. Also be aware that networks will often charge you for receiving calls and texts when you’re abroad - so if people don’t know you’re away and they call you, you can end up horrendous bills again.

Disadvantages of Pay Monthly

• Monthly billing: unlike pay as you go, where you top up when you need credit, the network bill pay monthly customers at the end of each month. They’re unlikely to warn you during the month if you’ve used more minutes than your free allocation, or if you’ve been calling numbers that don’t count as free. If you’ve been actively using your phone, the bill can come as a nasty surprise.
• Overzealous contracts: its hard to guess how many minutes and texts you send every month, so many people are on contracts that have many more free minutes and texts than you actually need. You could end up paying a monthly fee for calls and texts that you never actually use.
• Locked in and not going anywhere: pay monthly contracts are getting longer and longer every year. You can sign up for contracts anywhere between 6 and 36 months now, and 36 months is a long time to spend with one network. If you want to leave the network early or you don’t like the deal, you will be charged a penalty, sometimes amounting to hundreds of pounds.
• Credit checks: although networks love pay monthly contracts, they’re also a risk for the network. When you sign up for a new contract you will often be subject to a comprehensive credit check to make sure you can pay your bills. If you fail this, you won’t be able to complete your order. If you fail to pay your mobile phone bill, your credit rating will be affected.
• Locked phones: when you buy a pay monthly contract your phone is almost always locked to the network that you bought it from. If you later change network, or decide to move to pay as you go on another network, you won’t be able to use your phone without getting it unlocked.

The Case for Pay As You Go

So where does pay as you go fit in with all of this?

• Full control: with pay as you go, you top up in advance. You always know what you’re spending, and there won’t be any nasty debits from your account at the end of each month.
• Flexibility: you won’t be locked in to a contract. If you want to move to another network, you can do so at any time.
• Credit checks: the network won’t carry out a credit check on you when you buy a pay monthly phone or SIM.
• Unlocked phones: if you buy your pay as you go phone directly from a network, it will be locked to that network (just like pay monthly). However some deals at shops like Carphone Warehouse and Phones4u come with unlocked phones. They don’t advertise this for fear of upsetting their network partners, but if you ask your sales advisor they will be able to tell you if the phone is locked or not.
• Pay for just what you use: You don’t ever have to guess how much you’re going to use your phone with pay as you go - you just pay for what you use. If you don’t make any calls one month, you won’t be charged at all.

Conclusion

Contrary to your local mobile phone salesman, pay monthly contracts are not for everyone. Base your decision on your personal circumstances, and don’t be too easily persuaded to change your mind when you’re buying. If you don’t use the phone a lot, don’t need internet access and international calls then pay as you go is almost definitely the best option. If you are a mobile phone addict and want to take advantage of the latest phones and latest features, you’re almost certainly the perfect pay monthly customer. Just make sure you read the small print when you buy.