How to get debt free in a year
Find out which debt solution is right for youGet started
Answer a few simple questions
See if you are suitable
Understand your next steps
Have you ever thought of changing your mobile phone contract? If not, this guide is for you.
If you’ve been reading the news recently, you might have seen this article on mobile phone contracts, Switch plan for mobile phone contracts, and how the regulator Ofcom wants to make it easier to switch from one provider to another. It’s good news for us all, but it’s especially good news if you’ve realised that your mobile contract does not suit your needs.
First, we need to make it clear that these new rules don’t make it easier for you to cancel contracts that you’re in the middle of, that still remains costly. For instance, if you’ve signed up to an 18 month contract and then you decided to cancel after 10 months, you’ll probably be expected to pay for the remaining 8 month, this would be your termination fee.
However, Ofcom realised that even if there are more suitable deals available, people still don’t switch at the end of their current contract. When they asked why, the answer was because they thought the process was going to be difficult. So the new rules aim to resolve this issue and make the process easier – more like the bank switching process.
What will the changes be?
There are two proposals for how the new system will work. The first involves Ofcom placing the responsibility for switching entirely in the hands of the new provider. So, if you find another deal that you think is much better suited to your needs, or you need to change your contract quickly because of a change in your circumstances, all you’ll need to do is contact your new provider and tell them that you’d like to sign up with them. It will then be their responsibility to sort everything out with your old provider.
The second is that you’ll still be responsible for getting the PAC number, but that it’ll be much, much easier than it is right now. You’ll be able to ask for your PAC number by text or email, you’ll no longer have to call your current provider to get it.
At the moment, changing contracts is tricky. You need to contact your old provider and ask them for your PAC number. This can be a very difficult process, often taking a long time and many calls to your provider to get the number sent to you.
Once you get the PAC number, it is only valid for 30 days, after this time you’ll have to call and get another, so make sure you know what network you want to change to before you get your PAC number and then get it to your new provider quickly.
If you want more information on how to ask for your PAC code, Ofcom have a useful page on the subject Can my mobile provider refuse to give me a PAC?
Why is this important for people who might be struggling with their finances?
Now that there’s the possibility of being able to switch contracts more easily, what does this mean for you if you’re struggling with your finances? It means that if you’ve got a mobile phone contract that’s coming to an end, and you would like to change because you’re no longer able to afford the monthly payments, you can do it quickly and easily.
No one really expects you to live without a mobile in this day and age, as it’s more like an essential piece of kit, rather than something you have simply because you want one. So being able to switch to a cheaper contract might just be what you need – you can stay connected and still save money.
Do you really need a contract anyway?
This also raises the question of whether you really need a contract at all. And the best way to work this out is to look at your usage. And when we say look at your usage, we mean look at what you need to use, not what you use sending texts and making calls that you really don’t need to make. This is important because if you’re having trouble paying your contract, cutting back on your phone usage could be one place you can make real savings.
Working out what usage you really need shouldn’t be too hard, as your phone has a record of all your calls and texts. So, just skim back through the last two or three months if you can, so that you have a really good idea of what your average usage is and the messages and calls you needed to make over that time
Once you’ve done this, you can then start to look at whether a contract, pay as you go or SIM only deal would be best for you and, hopefully, save you money too.
Some things to think about
There are some things you need to think about when you’re wanting to change mobile phone contracts. For instance:
Pay as you go, monthly contract or SIM only?
First let’s look at Pay as you go (PAYG), which is pretty self-explanatory – you simply purchase credit and when it’s run out, you buy some more. When you decide on a pay as you go deal you will need to buy your own phone first. This allows you to a lot of flexibility with your phone choice. And with the cheapest PAYG phones now costing nothing but a £10 top-up, (yes, you still get to use the £10 credit for calling and texts), you can’t really go wrong.
Another upside to taking PAYG is that it doesn’t require you to have any kind of credit check. So, if you’re credit score isn’t that great, it won’t be a problem.
Of course these really cheap phones are not smart phones, but how many smart phone features do you really use or need? To find this out, it may be worth sitting down and looking at what you use over the month. And then deciding if you can do without those functions being on your phone. After all, if you really need a diary, you can get an old-fashioned paper one and use that instead. However, if you do decide you need a smart phone, you can get one by paying a £60 top-up.
Contracts, on the other hand, are when you pay a certain amount each month and you get a package of calling minutes, texts and broadband minutes to use. If you use your phone on a regular basis, taking a contract may be a better option for you. The cost of minutes is usually cheaper and if you go over your allotted amount for each month, you’ll simply be charged for the extra you use.
The cheapest deals around at the moment for contract is as cheap as £7.50 per month. That buys you smart phone, plus 250 minutes of talk time, 5000 texts and 500MB of data too. But, you are expected to sign up for 24 months.
Something to note with fixed mobile phone contracts – it’s the time that’s fixed, not the price – we bet you didn’t expect that, did you? We certainly didn’t, and when we asked around the office to see how many realised that is the case, most were surprised. However, Ofcom did take action against this practice and now, if you signed your contract after 23rd January 2014, the company have to give you a months’ notice for any price rise, and you can quit your contract with no penalty.
You’ll also have to keep in mind that you’ll need to pass a credit check to get a new mobile on contract. If your credit score isn’t that good, this could be a problem.
And then there are SIM only deals too. These are great if you love your current phone and want to keep it. It also means that you are not tied to any network, so you can change networks quickly and easily at the end of the minimum term of the SIM contract, which is usually 30 days. You can also take a SIM only deal for 12 months and because the phone provider provides nothing but access to their network, they’re usually cheaper too with some SIM only deals starting at just £4 per month.
Surprisingly, you will also need a credit check to take a SIM only contract with your provider. This is because the SIM only deals are rolling monthly contracts, so you are still signing up to a credit agreement.
So, whether you take a PAYG, monthly or SIM only deal depends on what you use your phone for and how much you use it. There’s no point changing what you already have, if what you want to take is cheaper, but not fit for purpose.
Carphone Warehouse have a handy guide summarising the advice given here.
If you like to take your mobile on holiday with you, or you have relatives or friends abroad that you like to keep in touch with, it might be worth finding out how much your provider will charge you to make and receive calls from abroad. Calls within the EU will be charged at the same rate as you’d pay in the UK. But, if you want to make and receive calls from outside of the EU, you will usually be charged more.
To find out what you’ll be charged by each operator, simply visit their website and view their roaming charges.
And that’s it! We hope this has prompted you to think more about your contact and whether it’s really working for you.
by Shelley BowersBack to blog home