By LESLEY GREGORY
So, your mobile phone contract is expiring soon, and there’s a new iPhone or Samsung on the way that looks pretty nifty. But along with its sharp camera is a very pointy purchase price.
Most people will dull the pain by spreading the cost of the handset over a contract. But should you?
Picking up a new handset as part of a deal with a network provider may mean you avoid a big, one-off hit on your bank balance, but make sure you’re not paying too high a price for that convenience.
And it’s not just about the maths. Bear in mind, too, that you’ll be giving up the opportunity to nab an even better deal over the next one to three years, depending on the length of your contract. It will also be hard to move if you’re unhappy with your provider.
Here are eight things to consider when your phone contract comes up for renewal:
Do the figures stack up? The actual cost of a handset tends not to be spelled out in the contract fee, but it’s possible to make a good estimate. Look for an equivalent plan — in terms of call, SMS and data allowances — being offered to those who already have their own handset. This may be called a SIM-only or BYO plan. Now, take that monthly fee away from the monthly cost of the plan-with-handset you’re considering. Multiply that by the number of months in the contract on offer (say, 24). You’d want the sum to be as close as possible to the price you’d pay outright. If it’s higher, you’ll need to consider what sort of ‘premium’ you’re prepared to pay for dulling the pain of an upfront payment.
Are plans going up or down in price? Just as you don’t want to lock in a high interest rate on your mortgage, nor do you want to be stuck with what will become an increasingly expensive plan over the next few years in comparison to newer, better deals.
Are data allowances going up or down? We can probably safely assume plans will only ever include increasing amounts of data — another reason you may not want to be stuck with an out-of-date plan.
Will the handset last as long as your contract? Small electronic goods tend to have 12-month warranties, but you could be committing to monthly payments for the next two or even three years. What if the phone dies outside its warranty but before your contract is up? Consumer watchdogs have been working on this, but check the warranty fine print.
Is there a new, better handset on the way? You don’t want to be paying top dollar, for two or three years, for a handset that will be out of date in two months’ time. Search for terms like ‘new iPhone’ or ‘Samsung rumours’ to see what may be coming. That said, ‘last year’s model’ can still have great ‘specs’ and become great value when discounted.
What’s not included? Naturally, telecommunications providers trumpet all the great things they’re including in their ‘hot’ offers. But, somewhere, they should also tell you what’s not included — such as calls to certain ‘premium’ numbers and access to certain types of content. Similarly priced plans may be vastly different when one includes Facebook videos in your data count, say, but the other doesn’t.
Are there any caps or limits? These aren’t as common as they once were, but look out for limitations such as only a certain amount of data being available at full speed under the plan, with the rest being slowed.
What’s the cost of ending your contract? If a better deal, or changed circumstances, mean you want or need to break your contract, check the terms and conditions to understand the process and cost of exiting your contract.
LESLEY GREGORY is TEBI’s newly appointed personal finance writer. She comes with a wealth of experience writing for publications in Britain, Australia and New Zealand. If you missed her first article for us, you can catch up here:
Picture: Tinh Khuong via Unsplash