SIM-Only vs Monthly Contracts: Which is Better?

Mobile phones are important; they can even be a lifeline at times. However, when it comes to choosing a new phone, it can be a little overwhelming. There are a lot of things to consider. One of the biggest factors is whether to go for a pay-as-you-go SIM, a SIM-Only plan or a monthly contract. Both options do have their own advantages and disadvantages, so let’s explore your options in more detail.

SIM-Only

A SIM-Only contract, as the name suggests, is a contract that covers the SIM; unlike other monthly contracts, the handset is not included in the price. The user still gets a certain number of minutes, texts and gigabytes or megabytes of data. They are often easier to amend or cancel because there are fewer factors to consider. Finally, some providers require a credit check which can make them inaccessible for some people unless they use a provider like Lebara, who have a number of SIM-Only plans available without a credit check.

There are a few advantages to a SIM-Only plan. Firstly, it tends to be one of the cheaper options meaning that your monthly expenditures are lower. You can use a handset that you already own; this is great for those who already have a phone that they are attached to and therefore don’t want another one. SIM-Only plans also tend to be far less commitment. Most of the time, you aren’t locked into a contract for any real length of time. They tend to work on a rolling plan. You also don’t need a credit check, and unlike pay-as-you-go, you don’t tend to run out of credit.

That being said, for a SIM-Only plan, you need to have a handset, and if you don’t already have one to use, then you need to buy one, and they can be expensive. Some handsets can cost hundreds of pounds, so if you don’t already have one, then you need to be prepared for this higher upfront cost. If you do have a handset already, then you need to make sure that it is unlocked. If you have a handset that has previously come from a monthly contact, it might be locked into that specific provider, meaning that you need to have it unlocked.

Pay-As-You-Go

This, again, should be pretty straightforward. You can buy a SIM for as little as a pound or two from most stores. You then do what is called a ‘top-up’. This is where you take the card that comes with the SIM, or you can get a voucher for your provider, and you top the phone up. There is no contract; you simply pay for what you use. Again, you need to provide your own handset. Pay-as-you-go SIMs are also a cheap option depending on how much you use the phone because you are literally only paying for what you are using. They are the lowest level of commitment because you aren’t tied into anything, there is no contract, and therefore there is no credit check either. You can also pick up pay-as-you-go SIMs for as little as a pound or two.

However, when you go with a pay-as-you-go SIM, you do run the risk of running out of credit; this renders your phone pretty much useless in terms of dialling out or texting or using the internet unless you are connected to the Wi-Fi. Topping the phone up can also be an inconvenience because you need to physically go to a store to either get your payment card topped up or buy a voucher.

Monthly Contracts

A monthly contract is often a little pricier, but it does tend to include the price of the handset, almost like a lease to buy contract. Included in the price, you get the handset, obviously, you also get a set amount of data, minutes and texts. Most of the time, the contract will run for twelve, twenty-

four or thirty-six months, and at the end of it, you own the handset. You can then upgrade to a new handset or continue at a lower price with the one that you have.

The biggest draw of a monthly contract is the fact that you receive a handset as part of the package. While the handset does constitute part of the monthly cost, it is significantly lower than if you were the buy the handset outright. There is little to no upfront cost. A monthly contract allows you to get a newer phone than maybe you would otherwise be able to afford, and you get it sooner than you would should you have to save up to pay for it outright. Taking out a phone contract can increase your credit rating because you are paying a bill regularly and on time. Locking into a monthly contract also means that you are eligible for upgrades when your contract comes to an end.

Monthly contracts also have their drawbacks. First and foremost, you are locked into the contract for its duration regardless of the state of the handset. This means that if you lose or damage the handset, you have to continue to pay the contract. They can be expensive too. Most monthly contracts also require the provider to conduct a credit check on the applicants. If you have poor credit, then you might not qualify, and you won’t be eligible to take out a contract. Finally, while you will never run out of credit and your phone won’t be turned off, this can be to your detriment too. It is possible to go over your contract. This means that you might be in for a surprise or two; if you don’t monitor your usage, you will be expected to pay the extra.

In The End

Each option has its own advantages and disadvantages. Choosing between your options when it comes to phone plans depends entirely on you. Think about what you need from your phone plan. If you need a handset and you can’t afford to buy one outright, then the monthly plan might work better. If You already have a handset or you can afford to get one, then you could go for a SIM-Only or a pay-as-you-go plan.

*This is a collaborative post