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How to Avoid Being Overcharged for Your Mobile Phone*

As surprising as it may sound, millions of Britons are overcharged for their mobile phone contracts every year. Recent research by Citizens Advice and the consumer regulator Ofcom has revealed two key ways in which networks overcharge. In this article, we take a look at how overcharging happens and what you can do to avoid it.

1. A lack of price transparency

Mobile phone contracts are complicated, because the monthly payment includes the fee for your tariff – or allowance of minutes, text and data, and a payment towards the handset. This is called a bundled phone contract and very few networks provide a detailed breakdown of what that monthly cost covers, i.e. the exact amount you are paying for the phone itself.

This bundling can cause a great deal of confusion amongst consumers. Many people believe a bundled contract is cheaper than buying the phone outright and going SIM-only. But in fact the opposite is true in the vast majority of cases (according to Citizen’s Advice). Without price transparency, it becomes very difficult for consumers to make informed decisions about their purchases.

While networks will argue charging more for bundled contracts is only fair, what happens at the end of the contract certainly is not. When your fixed term contract ends after 12 or 24 months, you have officially paid off the handset. However, three of the main four networks do not automatically move you to a cheaper monthly payment that covers just the cost of your tariff. In fact, if you don’t call them and expressly ask for a SIM-only deal or an upgrade, they will continue charging you the same amount until you do. This is how four million Britons are overcharged every year. 1 in 3 customers are paying an average of £22 a month more than they need to, for up to six months after their contract has ended.

Ofcom have taken some steps to prevent this gross overcharging. As of July 2018, companies must give 40-70 days notice of a contract ending. This gives customers ample opportunity to call customer services and secure a better deal.

To ensure you’re not overcharged for your handset, be sure to call your network at least 30 days before your contract ends. You can then ask to be moved to a SIM-only tariff if you wish to keep your handset, cancel your contract if you’d like to switch, or upgrade if you want a new phone. It is vital that you do this with notice to ensure you don’t continue paying for a device you already own.

2.Paying for more than you need
The second way in which consumers are overcharged is through the tariff itself. Research by billmonitor.com suggests only 30% of people use their full allowance, which means 70% are paying more than they need to.

Networks tend to promote the deals which will make them the most money. Deals with huge allowances of data like Three’s All You Can Eat packages or add-ons few of us actually need. These tariffs often seem like a great bargain, but if you’re not going to use 8GB of data and 3 months of BT Sport, you’re paying too much at any price. You wouldn’t buy clothes or food you don’t need just because they were on offer, so don’t do the same with your phone contract. The only person who wins in this scenario is the network.

To avoid being overcharged for your tariff, simply get to know your usage. You can do this in one of two ways; you can check past bills yourself to see how many texts, minutes and GB of data you use. Or you can use an online tool to analyse your bills for you. These tools will usually then show you deals based on your usage.

When you know your usage, be sure to compare tariffs from a range of networks and phone providers. Prices can vary widely from one network to the next so don’t be afraid to switch (or ask your network to price match) if you see a better deal elsewhere. Don’t expect your network to automatically offer you a deal based on your past usage; it’s not in their interest to do that. Instead take action for every member of your household and get each one of you set up with exactly the right tariff for you. 

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