15th December 2017

SIM Only vs Phone Contracts

phone-vs-sim

With the latest iPhone and Samsung Galaxy models already out, super-keen smartphone users have a big purchasing decision to make – but what’s the smart way to buy a new smartphone? Should you go for a mobile phone contract or a SIM-only deal? Read on to find out.

Mobile Phone Contracts and Sim-only Deals Explained

In a mobile phone contract, a customer chooses a handset and term of contract. He/she makes instalments over a fixed period (12 or 24 months) to pay off the cost of the new phone, whilst having texts, calls, and data included in the package.

A SIM-only deal is where the customer gets a subscriber identification module (SIM) but not a handset. He/she only pays for minutes, texts and data. There are two types of SIM-only deals: monthly Sim contracts and pay as you go.

Pros of Mobile Phone Contracts

• Texts and calls can be cheaper than pay as you go

Mobile phone contracts usually offer more competitive deals on texts and calls when compared to pay as you go deals.

• Free handset

With a mobile phone contract, you get cheap phones to purchase, sometimes even free.

• Gifts

Most mobile networks offer gifts when you sign up for a contract phone with them. The gifts could be vouchers, cashback, headsets, among other things.

Cons of Mobile Phone Contracts

• Limited Options

With mobile phone contracts, you are tied to a certain network provider for probably 12 or 24 months. This is a very long time if you want to purchase a new phone. Additionally, it could be a huge hassle if you want to travel abroad with the phone or, at the very least, a costly concern.

• Expensive in the long run

Contract deals may give you a cheaper phone up front; however, the actual monthly costs are very high. While the prices may vary depending on how expensive the phone is, you get to pay more over the long run.

Pros of SIM-only Deals

• SIM-only deals are cheaper

Since you are only paying for the SIM card and the preferred tariff, there is no phone cost to add to your monthly bill. Therefore, the same amount of data, texts and minutes will cost less on a SIM-only deal compared to a contract plan.

• SIM-only deals are flexible

Unlike contracts that may go for up to 24 months, SIM-only deals allow you to make a commitment for as little as 30 days. This is a great advantage for people who may not know the amount of data, minutes or texts they use in a month. Additionally, you have the freedom to change your plan more often, tailoring it to your needs.

• Less rigorous credit check

When opting for a SIM-only or contract deal, the mobile phone network provider will check your credit score. However, the criteria you have to meet for a SIM-only deal aren’t very comprehensive compared to a contract deal. Additionally, because the provider isn’t ‘renting’ you a mobile phone, it not only makes the price of your contract cheap, but it also qualifies you as a low-risk candidate.

Cons of SIM-only Deals

• Purchasing a new phone can be costly

While there are phone brands that do not cost much, the reality is that you will have to pay some hundred pounds to get a decent phone. For some, that’s a very high price to pay all at once. With contract deals, you get to pay for a mobile phone via monthly instalments.

Which One is Right for Me?

What package will work for you depends on two factors: how much you use your phone and what you use the phone for. If you send many texts, make many calls and consume a lot of data, you might be better off with a mobile phone contract. However, if you don’t send many texts or make many calls, a SIM-only deal might suit you.