You're wasting £200 a year on your mobile

Three quarters of us are on the wrong mobile phone tariff, and it's costing us dear.

Around three quarters of mobile phone users are wasting an average of £200 a year as a result of going for the wrong contracts, according to a new survey by price comparison site Bill Monitor.

The site analysed more than 28,000 anonymous mobile phone bills to look in depth at how we are all using our mobiles – and what we are paying for the privilege.

£5bn wasted

Bill Monitor was set up by a bunch of mathematicians in Oxford who decided to put their maths skills to use. They looked at bills from most of the major mobile networks: O2, Orange, Vodafone and T-Mobile.

And the findings are pretty incredible – UK mobile subscribers are wasting a total of £4.899bn a year as a result of sitting on a contract that doesn’t quite match their usage requirements.

That works out at £194.71 a year thrown away by mobile users on the wrong contract. Given the average UK mobile user spends £439 a year on their phone, that’s the equivalent of a 44% overspend.

Overstating our use

According to Bill Monitor’s research, more than half of us that are on the wrong contract have picked a tariff that offers more than they would use. So they may go for a deal offering 500 minutes free, but only use 250 minutes, or a deal that offers far more text messages than they would typically send in a month.

I know that I have been guilty of this more often than not, having not looked properly at how often I use my mobile, instead convincing myself that I use it far more than I really do. Indeed, those of us who go for a tariff that is too large for our actual use end up using just a quarter of our monthly allowance.

In total, this represents £2.62bn wasted each year.

Underestimating use

Of course, the opposite is also true – plenty of mobile phone users go for tariffs that don’t offer enough free minutes or texts, and so end up shelling out more each month for that additional use than they would had they gone for a more comprehensive tariff.

29% of users on the wrong contract are guilty of this, wasting a total of £1.53bn a year.

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Finally, 19% of users have the right tariff for their minutes allowance, but fail to make use of other free benefits, data and text allowances, or end up going for shorter contracts, which cost more than had they signed up to a 24-month deal.

Picking the right tariff

There’s one way to avoid wasting so much cash – pick the right tariff in the first place! But how do you go about doing so?

Here are some simple steps which should help you on your way.

Which type of contract

Mobile phone contracts do not come in a single, standard form, so first of all you need to determine which is best for you – do you want to pay as you go (based on your exact usage), or would you prefer to sign up to a monthly contract (where you enjoy a set allocation of free calls, texts, etc each month)?

There are a number of positives to going with a pay as you go contract. For starters, you’ll only ever pay for what you use. What’s more, as you can only use your phone when it has credit on it, it’s unlikely you’ll manage to run up an unexpectedly high bill. And there’s the flexibility – you can ditch the deal whenever you want to.

However, pay as you go is not so good for those of us who use our phone a lot – if you send a lot of texts or make a lot of calls, it makes sense to sign up for a monthly contract, as the free allocation you enjoy each month will save you money. What’s more, you tend to have the option of a free phone (or at least a heavily discounted one), rather than having to fork out the full cost for the phone - as would be the case with a pay as you go deal.

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The main negative is that you will pay for that contract each and every month, whether you send one text or 1,000.

There is a halfway house between the two – the SIM-only contract. They tend to run for about 30 days at a time, and offer the benefits of a monthly deal in terms of free minutes and texts, but with the flexibility that you can ditch the contract easily should you need to. I really like SIM-only deals as they can save you a small fortune, as we explain in The best SIM only mobile deals. However, you should note that you won't get a free phone with these deals.

What do you use?

If you have settled on a monthly contract, you now need to work out what you want from that contract. That means sitting down and working out how much you use your phone to help you find the right contract for you.

The easiest way to do this is to go through your old bills. It can be boring, but if it means saving £200 a year on your mobile spend, it has to be worth it! You could also ring your provider to see whether they will tell you your average monthly usage.

Shop around!

The final step is to shop around for a new deal. There are lots of different ways to compare the various deals on the market - Bill Monitor is one for example – but personally I really like Recombu. You can use the sliders on the site to narrow down the tariffs that offer exactly what you are looking for.

Many of us get a bit lazy on this point – I’ve been with O2 forever, and only ever tend to compare tariffs with them, for example. But even if you can’t be bothered with the perceived hassle of switching networks, you can still try to get an even better deal by haggling. After all, why would they want to lose a loyal customer? Good luck!

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