At a glance
SIM-only plans give you data, texts and calls for your existing phone.
They can offer more flexibility and lower overall costs than a monthly contract.
Monthly phone packages bundle a new handset with an airtime plan.
They offer the latest tech but usually at a higher overall price and with a longer commitment, typically 24 or 36 months.
What is a SIM-only plan?
A SIM-only plan is a type of mobile phone contract that includes data, calls and texts but not a new handset.
As you’re not paying off a new phone, SIM only deals are usually cheaper than traditional phone contracts.
You’ll either activate an eSIM or receive a physical SIM card that you pop into your existing phone.
Depending on your provider, SIM-only contract options typically range from rolling 30-day contracts to 24-month plans. Most offer unlimited UK calls and texts, but data allowances vary.
A SIM-only deal is useful if you already have a phone you’re happy with or you want to buy a new one upfront without being tied to a long-term contract.
Pros and cons of a SIM-only deal
What are the advantages of a SIM-only deal?
It can be easier to switch providers – many SIM-only plans are short-term or on monthly rolling contracts. This allows you to switch providers or plans easily without long-term commitment.
It could save you money – SIM-only deals generally offer lower monthly bills than contract agreements because you’re not paying back the cost of a new phone.
You can stick with your handset – if you’re happy with your current phone, you can keep using it and avoid upgrade costs.
You can upgrade to a new device when you like – because SIM-only deals aren’t connected to a specific device, you could switch your SIM into a new phone and stay on the same deal.
It’s more environmentally friendly – sticking with your old phone potentially means less electronic waste going to landfill.
Credit checks are less rigorous – your credit history will still be checked, but the criteria you’ll have to meet isn't as comprehensive as a pay monthly contract deal.
What are the disadvantages of a SIM-only deal?
New handsets are expensive – if you’re paying outright for a new phone, the cost can roll into hundreds of pounds. And if you like your phone loaded with features, it could even cost you over £1,000.
You may be locked in – if you have a phone that pre-dates December 2021, you might need to unlock it if it’s tied to a network provider that’s different from your SIM provider.
There may be fewer perks – network providers might not offer as many freebies and benefits as with a pay monthly contract.
What is a pay monthly phone package?
A mobile phone contract bundles both the handset and airtime plan into one fixed monthly payment.
Contracts are typically 24 or 36 months. They usually include unlimited calls and texts, but you can choose the data allowance you want.
This type of tariff can be a good option if you like to have the latest phone without the high one-off expense of paying for a new model outright.
As you’d expect, the newer the phone is, and the more features it has, the more you’ll have to pay each month.
How do pay monthly phone contracts work?
Once you’ve found a mobile phone deal you like, here’s what happens:
You sign up for a new mobile contract
A contract usually lasts 12, 18 or 24 months.
You’ll typically need ID (your passport or driving licence, for example) and two different documents that prove you live at the address on your application (such as a gas, electricity, council tax bill or bank statement).
You’ll also need a bank account so you can provide your sort code and account number to set up a direct debit for the monthly payments.
The phone provider will also check your credit score before deciding whether to sign you up or not.
You pay the upfront cost (if there is one), plus a fixed amount each month by direct debit
Your monthly payment includes a service charge from your network provider which covers the agreed limit of inclusive calls, texts and data.
If you go over your monthly allowance, you can still use your phone. But the extra usage will be added to your bill at the end of the month.
Once your contract ends
You can upgrade with the same provider or look for another deal.
Pros and cons of a pay monthly contract deal
What are the advantages of a pay monthly contract deal?
You can spread the cost – the handset price is split into monthly instalments, potentially making expensive phones more affordable.
Getting the latest model is more accessible – because you’re not paying for a new handset upfront, you could get your hands on the latest iPhone or Samsung Galaxy.
You can build your credit rating – if you pay your bills on time and in full, having a mobile phone contract could be a good way to build up your credit score.
You may get free gifts and other perks – some providers may offer freebies or other benefits to sweeten the deal.
What are the disadvantages of a pay monthly contract deal?
You’re locked into a network – being tied to a mobile network provider, potentially for up to 36 months, is a long time if your needs change.
There’s less flexibility to change your handset – having a long-term contract doesn’t allow you to keep switching phones. That’s unless you’re prepared to pay to upgrade early.
You’ll undergo a credit check – your mobile phone provider will want to be sure you can keep up with your payments. If your credit record isn’t so good, a contract deal may not be an option for you.
You could be overcharged – once the contract ends and your handset has been paid off, you might continue to be charged the same monthly amount unless you take action.
Is it better to buy a phone outright or on contract?
Whether it’s best to buy a phone on contract or outright completely depends on your personal situation.
However, as a general rule, it’s usually cheaper overall to buy something outright, if you can afford to do so.
It's worth considering the non-monetary costs and benefits offered by both options, and what they may mean to you. For example, you may need to build your credit rating.
In which case, a phone on contract may suit you best. If freedom and flexibility are more important for you, a SIM-only deal may be your best option.
How do I compare SIM-only and contract deals?
When you compare, take the whole package into account, including data and call allowances and features like free EU roaming.
If you’re in the market for a sparkly new handset, you can compare mobile phone deals using our mobile comparison service to look for a deal that suits you.
If you’re happy with your current phone or you’d rather buy a new handset separately, search for a SIM-only deal from our range of providers.
FAQs
Can I switch from a pay monthly contract to a SIM-only deal?
Yes, once your monthly contract ends, you’re free to switch to a SIM-only deal if you want. If you’re still in contract, you might need to pay an early termination fee or settle the outstanding handset cost before switching.
What is a pay-as-you-go SIM?
A pay-as-you-go (PAYG) SIM is a flexible plan that lets you pay for your phone usage upfront and top up credit when you need to. There’s no contract or credit checks.
PAYG deals could be useful if you don’t use your phone very often. But if you need to access the internet on the go, you may find that your top-up doesn’t stretch very far.
What is a data-only SIM?
A data-only SIM is designed for devices other than smartphones that use data on the go. Examples are tablets, smartwatches and mobile Wi-Fi hubs. It won’t provide you with a phone number but you will be able to access the internet.
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Over the past decade, Kate has worked in various industries, including company secretarial, small business support and property investing.
Her move to financial services in 2022 not only helped her find her niche in personal finance writing, but also just how alienating finance can be. She’s now motivated by making everyday money a piece of cake for everyone, helping her readers feel informed and in control.
Kate now specialises in savings and current accounts as well as broadband, mobile and energy products.
Ele Clark is an award-winning editor who has held leadership roles at Which? and news-stand publications in London and Dubai. She’s appeared across the press and media, including BBC’s Panorama. With almost 20 years’ experience in personal finance, insurance and consumer journalism, she leads a talented team at Compare the Market, creating insightful, accessible content to help people make informed financial decisions.
With the UK racing towards gigabit speeds and our phones more integral to our lives, Matt wants to make sure you have great packages that can keep up. And with more than 10 years' experience working with digital brands, he’s shaping our broadband, TV and phone comparison journeys.
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