How to reduce the cost of your mobile phone contract

Mobile phone bills are one of the categories where the difference between what people pay and what they need to pay tends to be largest. Contracts that made sense when you signed them two years ago are often significantly more expensive than the equivalent deal available today. The mobile market moves quickly and loyalty is rarely rewarded financially.

Check when your contract ends

If you are within an active handset contract, leaving early usually means paying the remaining months as an exit fee, which often eliminates any savings from switching. Check your contract end date first. If you are out of contract, you are on a rolling monthly arrangement and can switch at any time with 30 days notice, or less on some plans.

Separate the handset from the airtime

Many contract packages bundle the cost of the phone with the airtime plan. Once the handset has been paid off, usually after 24 months, the monthly cost should ideally reduce. But many people on rolling contracts after the end of their minimum term are still paying the same amount that included a handset cost, now just paying for airtime at inflated prices. When your contract ends, the most cost-effective approach is often to keep your existing handset if it works well and move to a SIM-only plan, which can cost as little as £6 to £15 per month for generous data allowances.

Use comparison sites and negotiate

Comparison sites including uSwitch, Mobilephonecomparison.co.uk, and MoneySuperMarket show the current market range for SIM-only and contract deals. Before you switch, call your current provider with a competing quote and ask if they can match it. Retention teams at mobile networks often have access to deals not available on the main website, and the threat of leaving is usually enough to unlock them. This works particularly well if you have been a customer for several years.

Right-size your data allowance

Many people pay for significantly more data than they use. Check your actual monthly data usage in your phone settings or your provider's app. If you consistently use 5GB per month, a 30GB plan is costing you money for capacity you never need. Smaller data allowances are considerably cheaper. If you are mainly at home or in buildings with wifi most of the day, your data requirement may be lower than you think.

Consider the secondary networks

MVNO providers (mobile virtual network operators) such as SMARTY, iD Mobile, Lebara, and Giffgaff operate on the same infrastructure as the major networks but at lower prices. SMARTY runs on Three, iD Mobile on Three, Giffgaff on O2. For many people, the service quality is identical to the major networks at a fraction of the cost.