Mobile phones can work in much the same way as a landline when it comes to billing. Mobile phones can be billed in many different ways, but the two main options are contract and Pay-as-you-go.
Pay-as-you-go phones are the most straightforward, and allow you to buy the handset outright and top up your phone whenever you run out of credit, which can be used to make calls and send texts.
Some Pay-as-you-go deals are a little more complicated in that they allow the user to send unlimited texts if they top up by a certain amount each month, or allow free calls to another mobile number or to people on the same network. The deals vary from network to network and change regularly.
As a general rule, if you spend less than £10-£15 a month on phone usage, Pay-as-you-go is probably best for you.
Contract mobile phones are more similar to landlines. The user takes out a contract for a fixed period, usually 18-24 months, for which they will pay a fixed monthly line rental for a certain number of minutes or texts.
Contracts have changed over the years, and the number of minutes and texts, and now data, you can get for your money has increased.
An average £35 a month contract will pay for your line rental, i.e. the service to your phone, and around 600 minutes and unlimited texts (subject to a fair use policy of 3,000), along with 1GB of data which most people are unlikely to get through using their phone normally.
A recent survey found that the average Briton spends £194 too much each month simply by being on the wrong contract, as many have far more minutes and texts than they’ll ever need.
Many people find themselves in this position as the latest phone they want may be only available for free on the more expensive tariffs, but it’s important to work out the added cost over 24 months, as sometimes it is better to take a contract that costs £10 a month less and pay a little upfront towards the handset.