How to choose a mobile phone deal

01 September 2015

Do you know your options when buying a mobile phone? Our guide can help you to decide whether to choose a contract, pay-as-you-go or SIM-only deal.



Before you can make an informed decision about the best way to buy a mobile phone, you need to know what your options are and what the differences are between them. 

On a basic level, you have three choices:

  • You can purchase your phone on a contract and be tied to a service provider for the duration of the contract;
  • You can use your existing mobile phone handset or purchase one outright and then buy a SIM card-only contract from your choice of service provider; or
  • You can purchase a phone outright (or use an existing phone) and choose a pay-as-you-go service.

When you purchase a phone on a contract, the initial price you pay for the phone will be far lower – or it might even be ‘free’. Of course, you will still be paying for your phone, but payments will be made over the course of the contract period (usually 12 to 24 months).

If you already have a mobile phone or choose to buy one outright, you can then purchase a SIM card from the service provider of your choice. The advantage of this is that you won’t be locked in to a long-term contract, and you can keep your phone number if you transfer to another service provider. 

Your contract can be as short as 30 days, and you can choose to be billed a set rate each month or choose a pay-as-you-go (PAYG) service. 

PAYG means you’ll pay for calls, texts and data in advance but you’re not locked into a fixed amount and can stop the service whenever you want.

Buying a phone outright is like buying any other product. It’s yours to keep and you can shop around for the best deals from service providers. You will have to pay retail price for your phone, though.

If you want a high-end smartphone, it may be prohibitively expensive.

What is the best mobile phone deal for me?

It can be tempting to accept a contract deal when you’re offered the latest model for free or at a hugely reduced price. 

However, you need to think about the terms of the contract before you decide whether a contract deal is best for you. Ask yourself:

  • Can you afford the monthly payments?
  • Will you use your mobile phone enough to justify the monthly expense?
  • Can you afford to pay the excess if you don’t keep track of your service usage?

Contract deals are best for frequent users of mobile phones since the cost of the services you use may be discounted. This makes them the cheapest option for those who make a large number of calls and texts a month. 

However, the monthly charges are higher and you’re locked into them for the contract period. You have to pay a hefty penalty rate if you opt out of the contract.

The latest smartphones are expensive but when you buy a handset outright (or own one already) and go for a SIM-only deal, you’re not tied into a contract and can change service providers whenever you like. 

SIM cards are inexpensive and – even if you decide to accept a longer contract period – are cheaper than contracts you enter into when you buy the phone as well.

PAYG deals are best for those who rarely use their mobile phones, and only use them for basic services. If you don’t make many calls or send many texts, and don’t access emails or use the internet, PAYG could save you quite a bit of money.

Think long term when choosing a mobile phone. Will the best deal today be the best deal over the next couple of years? Compare the cost of the different contracts versus the flexibility of owning your phone outright. 

The best deal for you will be the mobile phone that costs you the least over time, not the phone that costs less today, but more tomorrow.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.