Pretty much every man and his dog has a mobile phone nowadays, but how many of us are paying for services we do not use, or paying over the odds? We go through what you need to do to find the cheapest possible mobile phone deal.

Understand your usage

How you use your phone will have a massive bearing on the contract your go for and how much you pay. You will need to consider how many calls and texts you make, how much data you use and what sort of deal you are on now.

Monthly contract or pay-as-you go?

The first thing to look at is whether you are currently on a pay-as-you-go deal or a monthly contract.

A pay-as-you-go deal will mean that you:

  • Do not pay a set monthly amount; instead you top up your phone with credit as and when you need it

  • Do not have a package that includes a fixed number of calls and/or texts per month; instead you make as many calls and/or texts as you like and simply pay for it accordingly

Pay-as-you-go tends to suit those who are not heavy mobile phone users and perhaps only send a few texts or make a few calls per month, or those that own a mobile phone as a 'just in case' measure.

A monthly contract will mean that you:

  • Pay a fixed amount every month that includes a certain combination of inclusive calls, texts and data

  • Do not need to top up your phone with credit

Contracts tend to suit those who use their mobile phone frequently for sending texts, calling other mobiles and landlines, or browsing the net. This will probably work out much cheaper than if you paid individually for every call you make or text you send and it also often means that you get a new phone thrown in for 'free'.

If you are on a contract, at this point you should also find out how long that contract lasts and how much of it you still have to serve out. If you are on a 12 month contract for example, and are 4 months into that, you still have 8 months to see out before you can switch.

Find out what perks you are getting

You should also find out what benefits, if any, you are getting from your current contract or pay-as-you-go deal. For example you might be allowed unlimited texts to a certain number of friends in your phone-book, or discounted calls to those on the same network as you.

If you are not sure exactly what you are getting from your mobile phone deal, contact your network provider to check. You should find out:

Calls:

  • How many minutes are included as part of your deal

  • Whether these can be used to call landlines and any other phone network, or whether you are restricted to same-network only calls

  • Whether you can only make calls within the UK or whether International minutes are included too

  • Whether you can pick up voicemail messages for free

  • The cost of any calls not included in your contract

Texts:

  • How many texts are included

  • How many picture messages are included

  • The cost of texts over your allowance

Data:

  • Whether your package includes a data allowance & how much this is

How much are you spending on your mobile contract?

Once you know what you are getting from your current contract you need to find out exactly what you are paying each month.

Work out your mobile phone usage

Now you know what your current deal offers, you need to work out what you actually use! If you are current deal is costing you a lot it could be because you are regularly going over your usage limits.

Think carefully about what you use, for example, do you send lots of texts but only occasionally call or vice versa? Do you use your phone for browsing the internet, playing games, and do you ever make calls abroad?

Work out your usage by looking at your mobile phone statement if you are on a contract. If you are on pay-as-you-go, check your account. Look at how many texts you send and what kind of calls you make.

You should then be able to build up a picture of your regular usage and know exactly what you usually spend money on when it comes to your mobile, and what you really need from your contract.

Pros and cons of a mobile contract

Before you start searching around for deals, it is worth considering whether or not a mobile contract is right for you.

Why get a contract deal?

Signing up to a mobile contract will usually save you money in the long run, especially if you use your phone a lot. It also makes it easier for you to budget as you will know roughly what your bill will be each month.

A contract can also mean you will get a brand new phone without paying up front, as the cost of the phone is split across your contract term.

If you have a contract you will also have the peace of mind of knowing that you can use your phone any time without worrying if you have enough credit to cover a call.

What are the drawbacks of contracts?

The main drawback of committing to a contract deal is that you will need to pay a fixed monthly fee for the phone without fail for the contract period, now usually around 18-24 months. This means you will need to wait till the end of your contract to switch to a better deal or get a new phone.

Another hidden issue is that you can end up paying considerably more for your 'free' mobile phone over the term of the contract than if you had simply have bought it outright and gone for a SIM-only deal.

Before you decide whether or not a mobile contract is right for you, it is worth looking at what options and deals available.

Mobile cashback contracts

If you like the idea of getting some cash back from your mobile contract, this may be the option for you.

These contracts offer a certain amount of money back during the term of the contract. Usually you'll be given set dates or periods when you can claim some cash back.

When shopping around for deals deduct the cashback from the cost of the contract and only go for this type of deal if it works out cheaper overall.

Pay-as-you-go phones

This is the main alternative to taking out a mobile contract, and basically means you top your phone up with cash if and when you need it. This option offers great flexibility for the occasional phone user, but can be much more expensive if you use your phone often.

SIM-only mobile deals

If you do not need a new phone with your contract, a SIM-only deal is a great option as the monthly payments can be much lower than a standard mobile contract.

This is because the cost of the new phone doesn't have to be factored into how much you pay, you are simply being charged for the cost of your texts, calls, surfing and so on.

A SIM-only plan is unlikely to be the best option if you like to have the latest handsets and keep abreast of technology. In these cases a contract that includes a phone might work better.

However, you shouldn't rule it out as if you find a highly competitive SIM-only deal you could still end up saving if you pay for the new phone separately.

Which mobile phone should you get?

A big part of choosing the right mobile contract will be the phone handset you want. Different providers offer different models, so your options may be limited if you have your heart set on a particular phone.

If you do not want or need a new handset, it is definitely worth considering a SIM-only deal or pay-as-you-go and use your current phone.

If you are unsure ask yourself these questions:

  • Do I need a new mobile or will my existing phone suffice?

  • Is there a particular phone that I like and if so, are there any alternatives that I could consider for the right deal?

  • What functionality do I want my phone to have?

  • What do I want my phone to look like, i.e. colour of the handset, size of the screen, touch-screen, design of the handset etc?

If you know the handset you want then start looking at what tariffs are available. Use your usage information to single out the tariffs that offer the minutes, texts and data you need.

How to find a cheap mobile phone deal

Once you have established what you need from your tariff you are ready to start searching for the best mobile phone contract for you.

Compare mobile contracts direct

The best place to start your search is by going directly through the mobile providers. The four big mobile players, Three, EE, Vodafone and O2 are a good place to start but do not neglect the smaller networks like Tesco Mobile or Giffgaff.

If a network provider does not offer the phone you have set your heart then you can discount them from your search, but it might be worth looking at a similar alternative so you do not miss out on a great deal.

Compare mobile deals from phone shops

These will probably offer similar call plans and phones to the networks themselves. However, they are also likely to run other special offers and deals that could help you to save so they are well worth a look.

However, there is a catch; if you take out a contract or get a pay-as-you-go phone from one of these stores you will be buying from the shop itself, not from the network (i.e. EE) or from the phone manufacturer (i.e. Samsung).

Get the mobile deal you want for less

Once you have found the right deal and phone, it is worth seeing if you can get it for less! If you have found a cheaper deal but are still in your current fixed term contract, have a read of our guide, Can You Break Your Mobile Contract Mid-Term?

Haggle on price

If you see a deal that does everything you need it to, but the price is a little higher than you would like it is worth trying to see if you can persuade the provider to drop the price.

Our guide Should You Haggle with Your Mobile Phone Provider? Explains what you will need to do.

Unlock your phone

If you want to switch networks, but keep your existing handset you may need to unlock it so that it can be used with another network. If you are unsure how to go about unlocking your phone, our guide How To Unlock Your Mobile Phone tells you everything you will need to know.

Do you need mobile phone insurance?

When you purchase your new mobile contract you will almost certainly be offered mobile phone insurance. This is definitely something worth considering as mobiles are easily lost or damaged and they are not cheap to replace!

There are a few things you need to consider, however. You may have cover for your mobile as part of your home insurance for example so it is worth checking exactly what you have and the levels of cover you will need.

Check out our guide How to Find Cheap Mobile Phone Insurance for everything you will need to know to get the right cover.

Get money for your old handset

If you have signed up to the perfect mobile contract and got your hands on a shiny new handset, why not get a bit of extra cash for your old phone?

You might be surprised by how much you can get from phone recycling companies, especially if you have a relatively new handset to get rid of.

Save more with VoIP

VoIP, which stands for Voice over Internet Protocol, is a method of communication that allows you to speak to people either locally or internationally over your internet connection.

Rather than using up your monthly minutes, you can speak to friends and family through VoIP enabled apps, such as Skype, which also gives you the option of talking face-to-face (with the help of the camera on your phone).

This could save you a bundle, especially if you plan to talk to anyone who lives abroad.