Mobile contracts

Pay as you go – also known as pay as you talk and prepay - does exactly what is says on the tin. You pay a chosen amount into your phone account and this goes towards your call and text costs. There’s no contract, and usually – unless you’re opting for free calls or texts, for which there will be a monthly minimum top up charge – no equivalent line rental. This means you can use your tariff for as long as you like. However, pay as you go (PAYG) doesn’t usually include the 'free' phones you get with contracts – so if you like to have the latest phone you’ll pay full price for it.

Advantages

• The main advantage of a pay as you go deal is that you don’t have to worry about that monthly bill. You simply spend what you can afford
• You don't need to worry about line rental charges
• You always know how much you’ve spent, so PAYG is great for someone on a tight budget
• You can have a PAYG phone for as long as you want. If you suddenly find your service isn’t working for you, you won’t have to wait until your contract ends to change tariffs
• Pay as you go deals are very useful for short term phone use. For example, if you’re going abroad for a few weeks you might want to purchase a pay as you go SIM whilst you’re out of the country to monitor your spending
• PAYG is great for parents who want their children to have a mobile, but don’t want to run the risk of getting huge bills

Disadvantages

• Call and text costs are generally higher on PAYG, so you may find a monthly contract with a set number of free minutes and texts is better for you
• Unlike with a contract deal, you won’t get a free phone upgrade with your pay as you go tariff. If there is a specific phone you want you’ll have to pay the full RRP for it, which can be very expensive
• You also won't get the advantages of free minutes, texts and gifts you get with a contract deal
• Some deals require you to top up with a set amount each month e.g. £10

With a pay as you go phone you need to be careful you don’t run out of credit if you need to make a call or send a text. Most networks make it easy for you to check your balance using your phone, and there are lots of ways to add credit to your account:

• Online
• With your phone
• At cash machines
• Buying a top up voucher from a shop (these are sold in all sorts of places, from supermarkets to newsagents)
• Using a top up card that can be swiped in shops to add credit

Different networks offer different ways to do this though, so you might want to check that the network you’re interested in offers the most convenient method for you.

Having a pay as you go tariff is a very simple way to manage your mobile spending. You only spend what you have and won’t find yourself with a huge bill at the end of the month. Also, if you have had credit problems in the past you might find network providers are reluctant to let you have a monthly contract – so a pay as you go tariff is ideal.

If you are a parent, you might want your child to have a mobile for their own safety, but don’t want them running up huge bills texting their friends. A PAYG tariff is ideal for monitoring their spending and giving you peace of mind.

But if you like to use the latest phones and get free texts and calls, a contract deal will probably be much better for you. Some phones cost in excess of £250 when they first hit the market, but with a contract you might find they’re offered for free.

If it is, then use the uSwitch mobiles calculator to find the right deal to suit your needs.