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Contract vs Pay-As-You-Go

When looking for a new mobile phone deal, you can easily find yourself sifting through a lot of information. To make the search a little easier, one of the first things you should decide on is whether a contract or a pay-as-you-go SIM is the right option for you.

We’ve put together this handy guide to break down the pros and cons of each, so you get the best deal for you.

In this
guide:

An overview - what's the diffrence?

A contract lets you choose a package of minutes, texts and data allowance on a wide variety of handsets, including the very latest releases. You choose what’s right for you. It also means you are contractually obliged to pay your network network a monthly fee, typically for a period of 12-24 months.

Pay-as-you-go is exactly that: you just pay for the exact amount of minutes, texts or data from the network network directly, as you go along. To make use of a SIM-only pay-as-you-go mobile phone deal, you would need to purchase (or already have) an unlocked mobile handset.

What will you be using your phone for?

If you use your phone a lot, then a contract is likely the right choice for you. Having a continuous text conversation or ringing a friend for a long catch-up all adds up in cost, and you could find yourself frequently having to buy more credit in order to keep active on your phone if you’ve chosen pay-as-you-go. Similarly, if you’re a heavy social media user or video streamer, or someone who’s on the go or not always connected to WiFi, then having a monthly data allowance is much more cost effective.

Conversely, if you just like to check in with friends and family, send a few messages and are regularly connected to WiFi then maybe you don’t need all that a contract offers. Plus, if you’re not so fussed about having the latest gadgets, then many of the older handsets are very affordable.

We all use our phones a lot, so how can pay-as-you-go be beneficial?

Flexibility, flexibility, flexibility. Contracts are long because the mobile network wants to ensure they will make their money back for the handset and service provided. But not all of us know where we will be 12-24 months in the future; perhaps we’ll live abroad, our personal usage needs may change, or maybe we’re moving location and will be more reliant on WiFi. With a pay-as-you-go SIM, you’re not bound by the network: you’re just paying for what you use, when you need it. Easy.

Some pay-as-you-go SIMs even come with free calls and texts to other users on the network, which is something to consider if you frequently contact certain people on certain networks.

Although the upfront cost of a handset can seem terrifying, it’s a worthy investment if a pay-as-you-go SIM seems right for you. You’ll significantly save money on what you’d pay for the device over that long contract period, especially if you don’t need all the allowance on offer.

Yes there's the security, but is a contract ever cheaper?

One main attraction of a contract is the security. You not only get a brand new handset, but the deal almost always comes with a warranty period, so you can see how it works for you. Furthermore, routine repairs to the handset are often covered by your network network at no additional cost, and you can also buy contracts with full insurance coverage – a great relief and saving for those of us who are accident prone!

If you frequently travel, or have to contact friends or family abroad, then a tariff that includes international minutes can save you huge amounts of money when compared to a pay-as-you-go SIM, as this still carries a heavy cost.

If a contract is right for you, use our price comparison website to compare mobile phone deals and tariffs - this is the best way to choose what you want from your package.

Rolling contracts - a fusion of the two

There are some companies who have created monthly rolling contracts. You still have to provide the handset yourself, but you purchase a month-by-month mobile phone deal which offers similar amounts of minutes, texts and data as a regular contract, rather than on a pay-as-you-go basis. These are increasing in popularity and are great for those seeking something in between.

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Found what you need?

We hope that this guide had all the information you were after but if not,
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