How to save money on your mobile phone contract

You would probably be shocked to add up how much your mobile phone is actually costing every year. By charging a monthly subscription, the networks want you to concentrate on this small cost without realising how those monthly charges add up over a year.

Young woman using an iPhone

However, almost all contacts that supply a phone are charged over a two year contract. So when you are congratulating yourself on buying your iPhone 7 for £42 per month, consider what that actual cost is over the length of the two year contract – £1008 plus the up front costs!

You will, of course, own your phone after two years and should be able to sell it for around £342, but your phone has cost you a lot of money over those two years.

The secret the networks don’t want you to know

Most of the mobile phone networks are hiding something very important from you. This is a secret that is making them loads of profit and is costing you money needlessly.

You could be saving £100’s on your mobile contracts and this is why.

It is only by dragging out a calculator that you can see what is going on.

Most of the networks are, in effect, charging you very high APR’s for a hidden loan element of your contract.

If you were asked to pay a loan at 63% APR for your iPhone 7, I can only imagine the response, and I’m certain that I wouldn’t be able to print it!

The network secret is that you could well pay this punative interest rate, and here is how.

Monthly cost for a iPhone 7 32GB with 20GB with Vodafone : £58 per month plus £30 up front

Vodafone sell a 20GB SIM Only tariff for £20 a month, therefore the cost of phone is effectively:
£30 up front cost + £38 per month (£58 – £20).

An iPhone 7 32GB costs £599 sim free. With a £30 up front cost, you are essentially paying £38 per month for a £569 “phone loan” from the network. Therefore over 24 months you pay £912, which equates to taking out a £569 loan at 63% APR

The networks are really supplying you with a loan at ridiculously high APR’s

Yes, that is the secret that they hide from you. If you buy a sim free iPhone 7 32GB, you would pay £599 and then you could find a monthly sim only deal (it doesn’t have to be for 20GB data a month, of course) and you would save loads of money by not having to pay those stupendous interest rates for the hidden loan.

It’s not just Vodafone that makes these charges. if you look closely at most of the networks, they bundle in the cost of the phone with the cost of the network usage so that you cannot see how much you are actually paying for the phone.

Most people are concentrating so much on the handset that they forget to look into the hidden costs buried in the contract costs.

Tesco Mobile, is actually different, and I commend them for splitting out the network costs from the phone costs on their pricing pages (but interestingly, not on their iPhone 7 tariff page). At least there is more transparency, but you are also paying high interest rates with them for the luxury of spreading the cost of your phone over 24 months.

How to save money with your contract

A piggy bank for saving money

Generally, mobile phones cost the same from every supplier. For example, you will be charged £599 for a sim free iPhone 7 32GB no matter where you buy it from, though that will change once it has been on the market for a while.

So there is nothing that you can do with the actual cost of the phone.

Same applies to the network usage charges. If you want a 20GB sim only contract with Vodafone over 12 months, then it costs £20 per month and there is very little room for savings (unless you go for fewer data allowances of course!). So network usage costs are generally also fixed.

It is how you finance your phone purchase over the 24 month contract that is your opportunity to save £100’s. This is where a company like can make huge savings for you.

Before I explain how they can help, please note that we do not have any commercial relationship with at this time. I am just impressed with what they do and want to make you aware of how they can save you a lot of money.

How saves you money have looked carefully at the hidden loan part of the mobile phone contract costs from the networks and realised that there is a far cheaper way of financing these phone purchases over 24 months.

Instead of charging the huge APR’s that the networks get away with, have partnered with Zopa loans to provide the finance. It’s a stroke of genius because Zopa charge low interest rates, and in fact, they are often lower than the high street banks.

So instead of paying 63% APR at Vodafone, you pay around 9% APR at via the loan that they arrange with Zopa.

That low interest rate will save you £100’s on the cost of your two year contract!

You still need to use a network, of course, and can arrange that or you can buy a sim only deal directly with the networks.

So if you are in the market for a new phone, then I recommend that you check out deals at For example, they charge £26.57 per month for your iPhone 7 32GB. You need a sim only deal, on top, of course, but remember that Vodafone wants to charge you £38 per month, plus the £30 up front cost.

Over 24 months that is a saving of £304.32

There are credit checks when you buy your phone at, but the networks perform similar credit checks when you take a contract out with them too.

All in all, though, this seems to be a great way of having a fantastic new phone and saving piles of money at the same time. I like it, which is why I’m excited to tell you about it!

Consider 0% interest rate credit card deals too

Of course, the cheapest way to finance your new phone is to buy it outright (as long as you have the cash) and then buy a sim only deal. This is particularly good as most sim only deals are only for 12 months, giving you greater flexibility.

0% credit card

If you have to borrow to finance your new phone (and remember you are borrowing with a hidden loan with the networks, as I have explained) then you should also consider paying for it with a credit card offering an 0% APR interest free period.

These are now available for up to 27 months of zero interest free credit but you have to be very careful to pay off the loan before the interest free period finishes and there are other important things to consider before borrowing in this way.

If you are careful and get it right, then this is the cheapest way to finance your new phone if you can’t pay for it in full. Just be very careful not to mess up with these credit cards otherwise you will be paying off that phone for years and the total costs will be horrendous.

So in conclusion…

  1. Paying cash for your phone and taking out a 12 month sim only contract is the cheapest approach
  2. If you can’t raise the cash, consider using a 0% credit card but be very careful
  3. Otherwise seriously consider buying from as they will save you £100’s compared to the networks.

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