SIM only vs. contract phone packages

A SIM only deal allows you to pick the minutes, texts and data that you need, then either keep the mobile phone you have or shop for that separately. It’s an alternative to a monthly contract, which also covers the cost of a new handset. 

A SIM only deal allows you to pick the minutes, texts and data that you need, then either keep the mobile phone you have or shop for that separately. It’s an alternative to a monthly contract, which also covers the cost of a new handset. 

Holly Niblett
From the Digital team
minute read
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Posted 26 MAY 2021

Could you save money on your mobile phone package?

Almost everyone living in the UK – 94% of us – use a mobile phone, with 88% of adults owning or having ready access to a smartphone. In 2018, we checked our phones on average every 12 minutes of the waking day.

In between all that screen time, have you ever stopped to think whether you could be saving money on your current mobile phone deal? Now’s the time to weigh up the pros and cons of a  SIM only  or  contract  deal.

What types of tariffs are there?

There are three types of mobile phone tariff:

  1. SIM only – this is a deal where you get the SIM but not a handset. You’ll usually get a bundle of minutes for calls, texts and a data allowance for a monthly fee. It’s useful if you already have a phone but want a better price for data, texts and minutes
  2. Pay as you go (PAYG) – you pay only for your usage and top up credit as and when you need to. Useful if you want to manage your costs and don’t use your phone very often
  3. Contract – you’re committed to an agreement for a certain amount of time, between 12-24 months and pay a fixed fee every month. In return you get a handset – useful if you want the latest phone – and a set amount of texts, calls and data access each month.

The advantages of a SIM only deal 

  • You’re free to choose a provider – Most SIM-only contract deals mean you’re not tied to any one provider, and some contracts are as short as 30 days. If you don’t like the deal, you can swap (as long as you give notice as per any terms and conditions, you won’t be charged to change).
  • It could cost less – SIM only deals tend to be cheaper in the long run compared to contract agreements because you’re not paying back the cost of a new smartphone.
  • You can stick with your phone – If you’re particularly attached to your phone you can keep it. Just pop in your new SIM (you might need to unlock your phone first) and away you go.
  • Less rigorous credit check – Your credit history will still be checked, but the criteria you’ll have to meet isn't as comprehensive as a contract deal.

The disadvantages of a SIM only deal

  • Handsets are expensive – The cost of a phone on its own can roll into hundreds of pounds, especially if you like your phones loaded up with features.
  • Are you locked in? – You might need to unlock your phone if it’s tied to a network provider that’s different from your SIM provider.

The advantages of a mobile phone contract deal

  • 'Free' handset – Although technically it’s not really free, as you’re paying for it in your monthly fee, a contract deal is a useful method of getting the latest Apple iPhone or Samsung smartphone at a more manageable price.
  • Hassle free – You know what you’re getting with a contract. Even if you run over your allowance, you won’t get cut off, as long as you don’t hit your upper credit limit on your tariff.
  • Build your credit rating – If you pay your bills on time and in full, this can be a good way to build up your credit score.
  • Free gifts – Some providers will offer freebies.

The disadvantages of a mobile phone contract deal

  • Shackled – You’re tied into a set mobile network provider, potentially for up to 24 months. This is a long time if reception is poor where you live (even though there's a requirement for all providers to ensure a certain level of network cover). Also, it's a long time if you’re itching for a new phone.
  • Credit check – You’ll undergo a check on your credit history and if it’s not so good, a contract deal may not be an option for you.
  • Exceeding your allowance – While you might not have to worry about running out of minutes, if you go over your allowance you’ll be hit hard with high charges.

What are the advantages of dual SIM phones?

Some people choose a SIM only deal because they want a dual sim phone. This gives you two numbers and two identities at once.

Advantages of having a dual SIM phone could be that you live in an area with a poor signal and want to widen your network options, to benefit from whichever network has the strongest signal. You may want to have your work phone and personal phone as one device or, if you travel frequently, to have a home SIM and one for the place you're visiting – say with a pay as you go SIM.

You could also consider having one SIM as a contract and one pay as you go, if you opt for a dual SIM phone.

Is it better to buy a phone on contract or outright?

Whether it’s best to buy a phone on contract or outright completely depends on your personal situation. It’s hard to get a sense of the value involved, because not all phone contract deals split out the cost between what pays for the new handset and what pays for the texts, minutes and data. However, as a general rule, it’s usually cheaper to buy something outright, if you can afford to do so.

Are contract phones more expensive?

A phone contract is a form of credit agreement, which means you could be paying interest on your new smartphone. For the most popular handsets, like the new Apple iPhone or Samsung models, this interest can make an expensive phone even more so.

When would pay as you go be better?

If you can afford to buy a new phone outright, you might decide to avoid any potential interest and shop around for a SIM-only deal. SIM-only deals also offer a huge variety of packages, which might make it easier to find a deal that’s best tailored to you.

Alternatively, if you already have a phone that you’re happy with, and aren’t tempted to upgrade to a new handset, you could consider simply switching to a SIM-only, pay-as-you-go deal and save some money.

How do I compare SIM only and contract deals?

When making a choice between SIM only or contract phone deals, the answer lies in how much you need a new phone and what you’re prepared to pay for it. If you’re happy with your handset, a SIM only option might get you the minutes, texts and amount of data you need.

You can compare mobile phone deals using our mobile comparison service and find the mobile phone deal that suits you.

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