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Understanding Pay Monthly Mobile Phone Contracts
To put it simply, pay monthly phone contracts mean you will sign up to a particular service provider for a fixed term. The package you choose will give you a set amount of free services that include making voice or video calls, sending and receiving text or picture messages, surfing the internet, sending e-mails and downloading applications or data such as music and games. Once your monthly allowance has been reached, you will then pay the costs for each service that your particular provider charges.
You can choose a pay monthly phone contract that lasts 12 months, 18 months, 24 months or 36 months. The longer the length of the contract, the more bonus free services you'll be eligible for.
While High Street retailers can be persuaded to knock off a few pounds on the cost of your contract or handset if you bargain with them, you could save as much as 40% by buying a pay monthly contract online. Be aware though that on the surface you might be enticed by half price line rentals and cash-back offerings but then might be hit by exorbitant fees once you go over your free minutes, so it's important to carefully read ...
... the fine print.
The following guide describes the advantages and disadvantages pay monthly mobile phone contracts so you can decide whether they're the right fit for your needs.
Benefits of Pay Monthly Phones
Fuss-free call time
With pay-as-you-go phones, you'll need to top-up your call time when it expires - this can be irritating when you suddenly run out of credit at an inconvenient moment. In comparison, a pay monthly contract allows you to simply have the agreed contract charge and anything over that directly debited from your account each month.
Competitive fees
By paying your chosen service provider a fixed contract fee every month, you'll be given a package that includes a set amount of free minutes, texts and web access. The higher the price and term length, the more free benefits they will offer you.
New mobile handset
The latest in stylish mobile phones are rather expensive for many people. Unless you go for a SIM only deal, a pay monthly fixed term contract will allow you to choose a new handset for free or at a greatly reduced price as part of your package,. Once your contract expires, your service provider will offer you a new phone upgrade to entice you to sign up for a new contract term with them.
Loyalty bonuses
Most mobile service providers offer their pay monthly customers added benefits for staying with them in the long term, such as extra free calls, texts and games plus discounted prices for third party events.
Disadvantages of Pay Monthly Contracts
Contract package usage
The monthly cost of your contract is payable regardless of whether you use the free minutes, texts and other services included in your package. Research conducted by comparison company Omnio has demonstrated that a shocking 82% of pay monthly phone customers hardly ever even get close to reaching their allotted amounts of services, and 47% used less than half of the free texts and minutes included in their contract package. With this in mind, it's a good idea to initially choose a cheaper mobile deal instead of being enticed by the tons of free minutes and other services offered with pricier contracts. You can always take a contract upgrade at a later stage - some mobile providers even offer to analyse your monthly usage and contact you if they think you're paying too little or too much.
Fixed term responsibility
Pay monthly phone contracts are binding, meaning you will be locked into a particular network provider for a set term and will have to buy out the contract at a significant cost if you want to cancel with them. Customers such as students who don't want the responsibility or those who might want to change to a service provider with a better deal could find this problematic.
Credit rating
As with most fixed contracts with a service provider, they will generally carry out a credit check. If they find you to be a high risk customer in terms of being able to meet monthly payments, you could be denied a contract with them or be asked to pay an added insurance cost, even though you're confident of being able to pay the monthly fee.
Choosing a suitable pay monthly contract
When deciding on the best pay monthly phone deal for your needs, it's a good idea to ask yourself some useful questions:
1) Are you looking to get the latest mobile handset as part of your deal or are you happy with the phone you already have? This will determine the type of package and contract length you opt for.
2) Do you tend to call mobiles or landlines most of the time? This will identify the service provider costs that suit you.
2) Which network do most of your friends use? In addition to word of mouth referrals by people you trust often being the most reliable, many providers offer cheaper or free calls to people on the same network.
The above information will clarify whether pay monthly phones are the right way forward for you. All in all, your choice of contract depends on the balancing your individual needs with researching the varied offerings available on the marketplace.
Peter Williams is a mobile communications consultant and retailer of pay monthly phones.
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