Guide to Mobile Phone Contracts

Mobile phone contracts top the list of choices among mobile users in the UK. In fact, a large majority of users in the UK is hooked to a lengthy contract. If you're in the market hoping to get approved for a phone contract, below are the advantages and disadvantages you should weigh in thoroughly before signing any dotted line.

Advantages of a Phone Contract

1. Handset selection

One of the best advantages of a phone contract is the wide and diverse handset selection available. When you apply for a contract, you get to pick the handset of your choice without paying for it upfront. The cost of the phone is subsidized and divided according to how long your contract is.

In short, a phone contract makes the best option if you want to get your hands on the latest mobile phone choices in the market but can't pay for it outright.

2. Cheaper rates

When done right, a good phone contract can help you save a lot of money on your phone bill in the long run. This is because phone bundles which include a package deal on calls, texts and data services offer relatively lower rates than usual. The trick is to find best deal suited for your needs and finances to enjoy cheaper rates.

3. No top up required

Unlike with pay as you go or PAYG, phone contracts do not require users to top-up in advance in order to enjoy phone services. In other words, you'll never have to worry about being unable to make a call, sent a text or browse the Internet especially during emergencies. Your phone contract makes sure that you'll always have service anywhere there's coverage.

4. Free gifts and promos

With competition getting stiffer among providers, phone contract subscribers are often lured with irresistible free gifts and promotions. If you’re just applying for a new phone contract, you can look for offers that come with free gifts which may come in the form of other electronic devices like laptops, tablets, plasma TV and more. If you’re a current subscriber, you can call customer service and inquire about promotions that may be applicable for your plan.

5. Upgrade option

When you have a phone contract, you also have the option to upgrade your plan later on. If there’s a new handset out in the market that you want, for example, an upgrade option is usually available provided that you have an excellent record with your carrier.

Disadvantages of a Phone Contract

1. Lengthy contract

In general, phone contracts in the UK last for 12, 18 or 24 months. Depending on your handset choice and phone bundle, you may have to pay for a high fee during all those months. You won’t have to deal with problems as long as you can handle the monthly payments but a financial circumstance or two may cause you to delay or miss a payment at some point which could mean bad news for your credit score.

2. Credit Check

When you're applying for a phone credit and you have bad credit, chances are high that you might end up rejected. This is because major providers in the UK do not favor with customers who have bad credit rating. Before an application is approved, credit checks are often done. If your score is not good enough for your provider, you may need to look for another provider.

3. Expensive

Phone contracts also have a tendency to be expensive especially if you pick the wrong phone bundle for your needs. If you’re a heavy data user, for example, and you signed up for a plan that has minimum data allowance, you’ll end up with a hefty bill every time you exceed that data allowance. The same thing applies for calls and texts.