Is a mobile phone contract better than pay-as-you-go?

Despite being a necessity for most of us, owning a mobile phone doesn’t always come cheap, especially if you’re after the newest handset. Pay-monthly contracts can help you spread the cost, making phone ownership affordable and convenient but would you be better off with a pay-as-you-go?

To find the best mobile phone contract and SIM deals for you, we've partnered with Uswitch.

How does a pay-monthly phone contract work?

Most pay-monthly deals bundle together a new handset, data, minutes and texts. In exchange for this, you’ll pay a fixed amount each month for an agreed length of time. Contract lengths range from 12 to 24 months, but some can be even longer.

If you opt for a pay-monthly deal, you’ll usually be able to choose from the very latest smartphones. In most instances, interest will be added to the cost of the handset, which can make pay-monthly deals the most expensive way to buy a phone package.

Pay-monthly deals are also a type of credit agreement – the provider is giving you the phone and data on the promise that you’ll pay them back. Because of this, you can expect a credit check to be carried out.

If you’ve had a history of poor credit, it can be harder to get a pay-monthly deal. For example, you may be asked to pay a bigger deposit or upfront payment. In some cases, your application could be refused.

Pros and cons of a pay-monthly deal:


  • The chance to own the latest brand-new handset
  • Fixed monthly cost, can help you budget
  • Providers usually offer incentives, for example, free headphones or access to streaming services


  • Expensive and you’ll pay more overall for the handset
  • Credit check carried out with no guarantee you’ll be approved
  • No flexibility and you’ll be tied into a contract

What is pay-as-you-go (PAYG)?

With these deals, you only pay for the data, minutes and texts you need. PAYG is also contract free so you’re not tied in for any length of time. Not only that, because you’re paying upfront, there’s no need for a credit check.

If you’re a light or occasional mobile user and you really only use your phone for calls and texting, PAYG can be one of the cheapest ways to use your mobile. That said, the cost of calls and texts will usually be more expensive compared to a contract deal. Data will also cost you more per GB. BUT, you will already need to have a phone to use.

Pros and cons of a pay-monthly PAYG deal:


  • Cheapest way for you to use your phone if you’re a light user
  • No credit check needed
  • No contract needed


  • Expensive if you’re a heavy phone user
  • You’ll need an existing handset
  • You’ll have to remember to top up your phone
  • Cost will fluctuate with use which can make it harder to budget

You might opt for a PAYG deal if you get a SIM-free phone—read more about those here.

Pay-monthly or PAYG, which one is better value?

This will ultimately come down to your own personal usage—and whether or not you already have a usable phone (or have a plan to buy one separately). As a rough guide, if you only use your phone occasionally, a pay-as-you-go deal is likely to be the most economical option. However, remember that PAYG offers just that, and these are typically no-frills arrangements. It means you’re unlikely to get any extra perks such as access to streaming services or priority tickets to gigs and events, which some providers offer as part of their contract packages.

On the flip-side, pay-monthly deals are better suited to heavy or even moderate phone users, especially if you carry out a lot of online activity. Despite the fact you’ll usually pay more overall and are tied to a contract, these packages make phone ownership affordable by letting you spread the cost.

Is there an alternative to pay-monthly and PAYG?

If neither option feels right for you, you could also consider a SIM-only deal. These packages only provide data, minutes and texts (known as airtime) so you’ll need an existing handset. The main difference between SIM-only plans and PAYG is that you’re buying into an airtime bundle for at least one month so it can represent better value overall.

You can buy SIM-only packages as a rolling 30-day contract or as a longer fixed-term plan, typically lasting between 12 or 24 months. While rolling contracts give you the flexibility to continue or switch after 30 days, it’ll usually be more economical if you commit to at least 12 months.

Choosing the right mobile phone deal for you

To find the best mobile phone contract and SIM deals for you, we've partnered with Uswitch.

When you compare deals, it’s easy to get carried away, especially if you’re considering a new handset. But before you decide on anything, think about:

  • The type of phone user you are – this can help you choose the most suitable plan (PAYG, pay-monthly or SIM-only).
  • Your budget – remember that pay-monthly deals are fixed so the amount you pay each month will stay the same (unless you exceed your allowance). However, they’re also a credit agreement and missing or late payments could impact your creditworthiness in the future.
  • Commitment – consider whether or not you want to be tied down to a lengthy contract.
  • Incentives – perks are only perks if they’re something you’ll benefit from, so try not to be too influenced by freebies offered as part of a pay-monthly deal.

You should be able to get 5G access with either route.

To help you find the right mobile phone package for you, we’ve teamed up with Uswitch where you can compare a range of contract and SIM deals to suit your budget.

And read more in our article Is it better to buy a mobile phone outright?


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