Should I Sign A Mobile Contract?

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Mobile ContractSigning any kind of contract is a big responsibility and requires some thought, and mobile service contracts are no different. Today we’re talking about considerations when signing a contract, whether it’s a good idea for you or not, and what you need to keep in mind whilst signing. So, if you’re thinking about getting a new mobile service plan, keep reading to find out whether you should sign that contract or not…

Pay As You Go Phones aren’t Dead…

A few years ago the majority of people used pay as you go phones. These are the plans where you don’t sign a contract and have to put credit onto your mobile in order to use it. Whilst this can be inconvenient, running out of credit during an important phone call is a pain, there are still pay as you go phones around, and they have a couple of advantages. Firstly, with pay as you go you only ever pay for services that you actually use, unlike with contracts where you pay the same monthly price whether or not you use all of your allotted calling minutes, text messages and data. For light phone users who come nowhere close to using the high monthly limits included in most mobile contracts, pay as you go will be a better financial decision. It’s also easier to control your spending on pay as you go, and there are no bill surprises. Pay as you go rates tend to be expensive, so they’re not great plans for big users, especially big data users. The exception to that though is if you live in an area with lots of WiFi hot spots. If you can consistently connect to WiFi to get your mobile internet, there’s no point in paying for a mobile contract with a data plan. Pay as you go isn’t for everybody, but it is worth considering as an option before you sign a contract. And, if you’re unable to sign a contract, maybe because you failed a credit check or you’re not yet eighteen, pay as you go will be your only option.

Incentive Contracts are More Expensive in the Long Run…

Incentive contracts are probably the most common contracts that people sign. These are the contracts that give you a calling plan and a free or low price mobile phone (as opposed to SIM only contracts that give you only a calling plan). It is important that you realise that the phone you get with these plans is neither free nor low price, you will actually end up paying more than market price for the device. The monthly fee of an incentive contract will be higher than that of a SIM only contract, which is how the operator covers the cost of the phone. And over the duration of your contract all those extra fees will add up to more than the retail cost of the phone. Of course, if you need a phone and don’t have the cash to buy one immediately, then an incentive contract gets you the phone you need for a small initial payment. But in the long run, you’re better off buying your own phone and then just signing a SIM only contract.

The Wrong Calling Plan is Always Expensive…

Whether you decide to sign an incentive contract or a SIM only contract you’ll have to choose a calling plan. This is the set of monthly limits on the amount of calling minutes, text messages and mobile data that you can use for your monthly fee. Choosing the wrong plan is always going to end up costing you way more than you should be paying. Your monthly payment is the same if you use up all of your limits, or if you don’t use your phone at all. So a calling plan that’s too big for you will mean that you pay for minutes, texts and data that you never use. However, when you go over the limits in your contract you have to pay extra fees for using extra services, and these fees are high. That means that a plan that’s too small isn’t a great idea either. If you decide to sign a contract you’re going to have to carefully choose a calling plan that reflects your needs as a user to make sure that you’re getting the best deal and not wasting money.

Contract Duration and Quitting…

All contracts come in different lengths. Usually you’ll be offered the option of a twelve month or a twenty four month contract, though some operators have eighteen month contracts. Some SIM only contracts come in thirty day rolling periods. This means that every thirty days the contract will automatically renew for another thirty days until you tell the operator to stop service. In general, the longer your contract is the cheaper your monthly payments will be. This is especially true for incentive contracts, since the cost of the mobile phone will be spread out over a greater number of payments. But you need to consider whether or not you’re willing to commit to the company for a longer period of time. Once you sign the contract you’re not going to be able to switch easily to another operator to get a better deal. It is possible to leave a mobile contract early, but you’re going to have to pay to do so. Most companies charge a fixed fee multiplied by the number of remaining months in the contract when you stop service, and that can be pretty expensive. On top of that, if you have an incentive contract you’ll be required to pay the remaining balance on the phone before you can leave the company. Another consideration with incentive contracts is that they often offer low priced upgrades on mobiles when you sign up for a second contract. If you sign a long contract the first time, you’re going to have to wait longer to get your low priced upgrade. How long you’re willing to sign a contract for is up to you, and you’re going to need to balance all these factors when deciding.