Contract or Pay as You Go – Which Is Right for You?

Choosing your next handset may be the most obvious part of deciding the future of your mobile phone use, but have you decided whether to opt for a contract of a pay as you go? You should think long and hard about which is right for you, as making the wrong choice can work out to be costly.

Contract Phones

If you are looking for the latest mobile that is packed with features and the best software available then this can be costly. By taking out a contract with your chosen network provider you can get the best phone available and spread the cost throughout the term of the contract.

The more expensive handsets usually come with an 18 or 24 month contract. The network providers offer the handsets at an initial discount, so you may find you only have to pay £50.00 for the phone as an upfront payment. You will then pay a fixed amount each month until the contracted term is over. This regular monthly payment is the way the network recoups the cost of the handset.

On top of the monthly tariff fee you will also have to pay for any call, text or data use outside of your allocation. This is where having a contract phone can become expensive. Using the mobile phone sensibly and being extra careful when travelling internationally can mean the bills stay within a manageable budget.

The downside to a contract is the fact you are tied to that network provider for the full term you signed up for. If you see a great deal elsewhere you will miss out on it because of your contract. If you did decide to end your contract early you will incur a penalty. Usually the fee is to pay the line rental for each month still outstanding on the contract. This is because you got your handset for a really low price at the beginning of the contract and the company needs to claw back that cost. This is also to stop people from thinking they can sign up to a contract just to get the discount on the handset and then cancelling without paying for it.

Some network providers will allow you to change tariff during your contract period but usually only if the tariff you are changing to is the same price as the one you are currently on, or more expensive.

mobile phones

Pay as You Go (PAYG)

Opting for a pay as you go handset is perhaps the best choice for children and for those who will only be using the phone for emergencies. Children can get carried away with their telephone calls, their text messaging and if their handset is compatible, Internet usage. This can mean they run up big bills that they are unable to pay, and the parent will then be liable for. If you are getting a new phone for your child, then a pay as you go phone might be a good idea until the novelty of having their own phone wears off and their usage becomes a little more sensible.

Those who may not be using their handset much might find a set monthly charge not at all cost effective, so pay as you go is perfect. You can top up with credit when you need to, and use the phone for the few calls they wish to make. It is best to shop around for networks even when choosing pay as you go, as some have limits on how long you can have the credit for. Some companies offer an unlimited time period in which to use up the credit, most have a limit of 12 months. If the credit is not used within that time period then it is lost.

In Emergencies

The obvious downside to pay as you go phones is the fact that once the credit is used up the phone cannot be used to make calls. This makes the handset potentially useless in emergency situations, except that you can still ring Emergency Services

Phil Turner finds great Orange deals every week, well great except that he doesn’t need a phone right now.

Photo source: http://www.flickr.com/photos/athomeinscottsdale/5171125430/

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