The smartphone market is a bit of a blur to me, with deals left, right and centre and lots of different ways to pay. So what is the cheapest way to buy a new one?
Apple fans will be well aware of the rumours of the new iPhone coming out this September, but when buying a new phone is it cheaper to sign up to a contract or get a sim-only deal?
After years of dedication to my Blackberry, I recently upgraded to the Apple world and found the whole process very stressful.
To start with there are endless options to choose from, such as the length of the contract, how you pay and the size of the data allowance you will need. And the phone companies don't make the process any easier.
It’s most common for phone providers to offer longer contracts because they’re then guaranteed a customer for the duration of the contract. But is this the best way to get a smartphone?
Pay monthly phones
When you buy a new smartphone on a pay monthly contract you’ll have to choose a contract of 24, 18 or 12-months. If you want to cancel the contract early, there will be a penalty charge to cover the rest of the payments.
There's a full list of available deals on our comparison tables and the good thing about a traditional contract like this is that you can usually get a reduced, or sometimes free, handset.
The overall cost of the phone is swallowed into the monthly direct debit payments – so it’s good if you’ve not got the money to pay upfront – but this also means you’re locked into a deal for up to two years.
Within the bundle you’ll have a certain allowance of minutes, texts, data and calls and you need to choose an option which meets your requirements. For example, if you only use your phone for the internet and never call anyone – go for a higher data allowance.
The main downside to this is that by the end of the term, the phone won't be worth as much as it was brand new – and therefore you’ll get less money for it if you try and resell it.
Pay-as-you-go (PAYG) phones
My first ever phone was on a PAYG contract and I spent most of the time running out of credit and running up quite big bills. However, they are beneficial for certain people. As you only pay for what you use, this is good for people who aren’t on their phones much.
There’s also no credit checks involved or contracts so you can change your phone, or the way you pay for it, whenever you like without penalty. However, you’ll need to pay upfront for the phone, and not all models – especially the more expensive versions - will allow this.
Sim-only phones
When looking at the overall costs of your phone, a sim-only deal works out most cost efficiently. This works by buying a sim card, with an allotted allowance topped up on it, and using it with your handset.
Most sim-only deals last around 30 days and they’re a lot more flexible than the standard two-year pay monthly contracts.
For example, with Giff Gaff, you can get 250 minutes and unlimited texts and data for £10 a month. This is far cheaper than going through a traditional contract but you need to pay the upfront cost for the phone.
Even with that factored in, it still works out cheaper. Say you bought an iPhone 4S for £499. Over a year the phone, along with the £10 rolling contract, would cost £619. You also have the freedom to sell this whenever you like (such as when the new iPhone is released) and as you’re not stuck in a longer contract the phone won’t devalue as much.
However, a similar deal from Vodafone with this phone would cost £31 a month (over two years) with a £149 upfront cost. The contract is also not as good because it only includes 500MB of data.
How to ask for a cheaper deal
On the internet, and in a mobile phone shops, there will be certain deals available for everyone but it’s always worth asking for more.
This is because providers know if you sign up to a contract with them, you’re then guaranteed to be a customer for the next two years and they often throw in sweeteners to make sure you sign up (if you ask).
Each time I’ve ended a contract I’ve called the customer service department of my provider and asked what other deals are around. It’s worth asking for more and helps if you’ve got information you can quote from other providers.
What to do with your old phone
When you’re finished with your old model, instead of consigning it to the rubbish dump, sell it online and make yourself some extra cash. There are numerous websites online to help you with this, and a comparison of them all can be found on Sell My Mobile.
Right now you could make £211 from an iPhone 4, or £207 for a Samsung Galaxy S2 – which would go a long way to cutting the costs of a new mobile if you had opted for a sim-only deal.
More on smartphones:
Cheapest ways to use mobile broadband abroad
Top alternatives to the iPhone 4