Phones: contract vs SIM-only

Lesson 1 of 13 in our free Big Purchases guide: a 5-minute money game with the key points below.

Reading is cool. Playing is cooler.

This lesson is a 5-minute game. Free, no sign-up needed.

The story so far

Mo: New phone for £0 upfront! Just £45 a month. Basically free.
Nana: For how many months, love?
Mo: …24. Oh. Oh no. That's treat maths in reverse.
Chip: Always work out the TOTAL cost: monthly × months + upfront. Then compare with buying the phone and a cheap SIM-only plan.

Contract: £45/month for 24 months, £0 upfront. Total cost?

£45 × 24 = £1,080. That's the real price tag.

Option B: buy the same phone for £600 and get a £10/month SIM-only deal for 24 months. Total?

£600 + (£10 × 24 = £240) = £840. That's £240 less than the contract — if you can afford the upfront cost without borrowing at a high rate.

Fact: “Many phone contracts are credit agreements that show on your credit file.” — Pay on time and it can help; miss payments and it hurts.
Myth: “When your contract ends, your bill automatically drops to SIM-only prices.” — Not always. Check when your deal ends and switch or renegotiate — set a reminder.
Fact: “SIM-only plans are usually shorter and more flexible.” — Often monthly rolling or 12 months, so you're not locked in.