What Mobile Phone Plan is Best?

Knowing how to compare mobile phone tariffs can be a tricky business. It’s tough enough trying to choose the best mobile phone from all the gleaming shop displays.

Here are a few tips that should make it easier to find and compare cheap mobile phone deals..

Pay-as-you-go vs pay-monthly

There are three main ways of paying for your mobile phone use:

• Pay-as-you-go (PAYG)
• Pay-monthly contract
• Sim-only contract

The best option for you will depend on how much you use your mobile for calls, texts and internet browsing, and how often you want to upgrade to a new handset.

To get an idea of which mobile providers offer the best value for money check out our ‘best mobile networks’ page, which includes the results of our customer satisfaction survey on mobile operators.

You can also take a look at our mobile phone reviews for expert help on choosing the best mobile handset. We put hundreds of mobiles through our tough lab tests to help you narrow down your options.

Pay-as-you-go (PAYG) mobile tariffs

With a PAYG tariff there’s no fixed monthly fee and you don’t have to sign up to a direct debit agreement.

Instead, you pay for your mobile phone use by ‘topping up’ your mobile credit in advance. You can usually get top-up vouchers in a range of high street stores, and many PAYG mobile providers let you top up online or by phone or text. Once you’ve used up all your credit, you won’t be able to make outgoing calls or texts until you top up again.

PAYG pros

• You only pay for the call minutes/texts you use. There’s no monthly contract fee to pay.
• You can only use your phone when there’s credit on it, limiting the risk of running up unexpectedly high bills.
• It’s suited to light users (less than 50 minutes of calls and 50 texts a month, say) and those under 18, as you don’t have to sign up to a mobile contract.
• No credit check.
• No contract so you can terminate your PAYG deal whenever you want to without penalty.
• Watch out for terms and conditions that fix your mobile handset to a particular mobile network unless you pay a fee to unlock it.

PAYG cons

• You’ll probably have to pay full price for a handset up front.
• Less mobile models to choose from.
• Some operators require a minimum PAYG mobile top-up to qualify for certain incentives (such as free weekend calls).
• Calls per minute and texts may cost more than pay monthly customers.
• You must top up every time your credit runs out.

PAYG credit warning

If you don’t use your PAYG mobile for a long period, your provider may assume it’s no longer in use and deactivate the number. If this happens you could lose any credit that’s on the phone.

If you have a PAYG mobile for emergencies only, we recommend making a quick call on it at least once every three months so the provider knows your phone is active.

Pay-monthly mobile contracts

With a traditional mobile contract, you pay a fixed minimum monthly fee by direct debit and get a free or subsidised mobile phone as well as a fixed number of inclusive call minutes and texts. You’ll have to commit to a 12, 18 or 24-month contract.

When you’re tying yourself in to a long mobile contract, it’s crucial that you pick a mobile operator that will deliver top-notch customer service.

Pay-monthly pros

• Customers get a wide choice of free or subsidised mobile phone handsets.
• Some of the latest handsets are available.
• Monthly fees include a fixed amount of call minutes, texts and internet usage. If you stay within your usage cap, you’ll never pay more than your minimum monthly fee.
• You’ll never be left without a mobile phone service because your credit has run out.

Pay monthly cons

• You must agree to a minimum 12, 18 or 24-month contract, which involves signing a direct debit form.
• If you want to cancel early you may be charged a lump sum to cover all of the monthly payments for the remainder of your contract.
• Your minimum payment is fixed, whether or not you use all your mobile call minutes/texts.
• If you exceed your usage cap, you’ll have to pay extra for each additional minute or text.
• Calls to some numbers ? such as international calls or calls to 0800 or 0870 numbers ? won’t be part of your inclusive minutes and will be billed on top of your minimum monthly fee.
• If you have a poor credit rating, you may have problems getting accepted for a contract, particularly if you want a high-spec handset such as the iPhone.

Sim-only mobile contracts

With a Sim-only deal you get a new mobile Sim card but not a handset. Sim-only contracts, such as O2′s Simplicity, usually tie you in for only 30 days at a time. Orange, T-Mobile, Virgin Mobile and Vodafone also offer Sim-only contracts.

Even if you want a new mobile handset, you might still be better off with Sim-only. When we compared a range of Sim-only mobile tariffs with equivalent pay-monthly mobile tariffs that included a free handset, we found that the monthly savings you would make from choosing the Sim-only tariff over an 18-month period would often pay for the cost of a decent mobile handset outright.

Sim-only pros

• More flexible than lengthy mobile contracts that include a free or cheap mobile phone.
• You’ll get more mobile minutes/texts for your money than with a mobile contract that includes a handset.
• You can save up to £15 a month compared with traditional pay monthly mobile tariffs with equivalent minutes and texts.

Sim-only cons

• No free or subsidised mobile phone.
• You might have to unlock an existing mobile phone with a new mobile service provider.
• If you want a top-of-the-range mobile handset, you might be better off with a traditional contract