There's a very common and very expensive mistake that millions of people in the UK make with their mobile phone contract. They finish paying off their handset, the minimum term ends, and they just... keep paying the same amount. Every month. For a phone they already own.
If that sounds like you, you could be wasting anywhere from £10 to £30 a month. That's up to £360 a year for absolutely nothing. Let's fix that.
How mobile contracts actually work
When you sign up for a phone contract, your monthly payment covers two things: the cost of the handset (spread over 24 or 36 months) and the cost of your airtime (calls, texts, data). The problem is that when you've finished paying off the handset, many providers don't automatically drop your price. They just keep charging you the same amount.
Since 2020, Ofcom rules mean providers have to notify you when your minimum term is ending. But a notification is easy to miss, especially if it's buried in an email you never open. And even if you see it, the inertia of doing nothing is powerful.
So step one: check if you're out of contract. Log into your provider's app, check your account settings, or just call and ask. If your minimum term has ended, you're free to switch and you should.
SIM only: the easiest money saver going
If you've finished paying off your phone and it still works fine, switch to a SIM only deal. You keep your current handset, you just pay for the airtime. And the savings are dramatic.
A typical phone contract might cost £35 to £55 a month. A SIM only deal with comparable data? £8 to £20 a month. That's a saving of up to £35 a month, or over £400 a year. For doing essentially nothing except swapping your SIM card.
SIM only deals also come with much shorter commitment periods. Many are rolling monthly contracts, meaning you can leave any time if a better deal comes along.
The MVNO advantage: same network, less money
You've heard of EE, Vodafone, and Three. But have you heard of SMARTY, giffgaff, Lebara, or Voxi? These are MVNOs, which stands for Mobile Virtual Network Operators. They don't have their own masts. Instead, they use the big networks' infrastructure but sell it cheaper because they have lower overheads.
Here's who uses which network:
- SMARTY: Uses Three's network. Known for very cheap data deals and a "pay for what you use" model.
- giffgaff: Uses O2's network. Popular for flexible plans and a community vibe.
- Lebara: Uses Vodafone's network. Great for international calling.
- Voxi: Owned by Vodafone. Aimed at under 30s with social media data that doesn't count towards your allowance.
- Tesco Mobile: Uses O2's network. Often has competitive family plans.
The coverage is identical to the parent network. If Three works well in your area, SMARTY will too. Same signal, same speeds, just a lower monthly bill.
How much data do you actually need?
Providers want to sell you unlimited data. It sounds great. But most people use way less than they think.
The average UK mobile user gets through about 5 to 7GB per month. If you're connected to WiFi at home and at work (which most people are), your mobile data usage is probably just browsing on the train, scrolling on your lunch break, and the occasional map lookup.
Check your actual usage. On iPhone, go to Settings, then Mobile Data, then scroll down to see your usage. On Android, go to Settings, then Network and Internet, then Data Usage. Look at the last few months and see what you're actually using.
If you're using 5GB a month and paying for 100GB, you're throwing money away. Drop to a plan that matches your actual usage and pocket the difference.
Watch out for annual price rises
This is one of the sneakiest things in mobile contracts. Most major providers now include a clause that lets them increase your monthly price every April, usually by CPI inflation plus 3.9%. In recent years, that's meant annual rises of 7 to 10%.
So that "£35 a month" contract you signed? By the end of a 24 month term, it could be £40 or more. And it's all perfectly legal because it's in the small print you agreed to.
MVNOs tend not to do this. Another reason to consider switching. When you're comparing deals, always check whether annual price rises apply. A slightly cheaper deal with annual rises could end up costing more over the full term than a slightly pricier one without them.
Can you keep your number?
Yes. Always. It's your right. When you want to switch, just text "PAC" to 65075 from your current phone. You'll get a PAC code (Porting Authorisation Code) by text within a minute. Give that code to your new provider when you sign up and they'll transfer your number across. The whole thing usually takes one working day.
If you want to leave your current provider but don't want to keep your number (maybe you fancy a fresh start), text "STAC" to 75075 instead. Same process, but without the number transfer.
When a new phone contract does make sense
SIM only isn't always the best move. If your current phone is genuinely struggling, broken beyond reasonable repair, or so old it's not getting security updates, a new handset contract can make sense. But do the maths first.
Compare the total cost of a phone contract (monthly price times the number of months) versus buying the phone outright and getting a separate SIM only deal. Sometimes the contract is cheaper because providers get bulk discounts on handsets. Often, it's more expensive.
Also consider refurbished phones. Companies like Back Market and Envirofone sell second hand iPhones and Samsung devices in great condition for significantly less than new. A refurbished phone plus a cheap SIM only deal is often the most cost effective combination.
The five minute switch
Here's your action plan:
- Check if you're out of contract
- Check your actual data usage over the last 3 months
- Compare SIM only deals (look at MVNOs as well as the big networks)
- Text PAC to 65075 to get your switching code
- Sign up with the new provider and give them your PAC code
The whole thing takes about five minutes. The savings last all year.
Want to see how much you could save across all your bills, not just mobile? Take the free Steward money quiz and get a personalised breakdown in minutes.