Mobile phone plans explained

Need a mobile phone deal but not sure where to start? We explain the features of each type of plan to help you decide.

Having a phone with the features you need is only half the story. You need the right phone deal so you don’t run out of minutes half-way through a conversation – or overpay for a service you’re not using. We’ve created this guide to help you choose the right plan and get the most out of your handset.

There are three main types of plans to choose from, but knowing which one is best for you can be tricky. We’ve given an overview to guide you.

Pay-as-you-go plans

  • Pay-as-you-go (PAYG) plans are best suited to those who only use their mobile occasionally. If you’re not an avid texter or internet surfer, then you should choose a PAYG plan.
  • A PAYG plan is exactly what it says on the tin: a plan that simply lets you top up your phone credit whenever you need it. This means you don’t have to be tied into any monthly bills or long contracts.
  • However, you’ll typically pay a premium for this added flexibility. SIM-only plans generally include unlimited calls and texts, so can stop you overspending.
  • It’s important to note that you must remember to make a “chargeable action” – such as a call or text – at least once every few months to keep your top-up credit and SIM card active. To see what your phone provider’s inactivity duration length is, see our table of providers.

Monthly contract plans

  • Monthly contract plans require you to pay for your phone plan in monthly instalments, and these contracts include a new handset as part of the package.
  • The standard time frame in which these contracts run is 24 months. While you can get shorter contracts with some providers; this may mean having to pay a higher monthly amount.
  • If you want a new handset but don’t quite have the means to pay for one upfront, then a monthly contract is a good choice.
  • By paying a set amount each month, you can know exactly how much you’re spending for your phone.
  • Since your allowance of minutes, texts and data will remain the same each month, this deal does not suit those who want flexibility. It is also not a great option for those who either rarely use their phone, or those who do not require a new handset.

SIM-only plans

  • SIM-only plans offer a package of minutes, texts and data which you pay for in monthly instalments.
  • These plans are essentially identical to monthly phone contracts, except they’re typically cheaper since the price doesn’t include payments towards a new phone.
  • If you’re somebody who wants flexibility then SIM-only plans are a good fit, since you can choose plans that range from as little as 30 days to 12 months.
  • SIM-only plans suit those who already own a handset, but still want the generous minutes, texts and data that often come with monthly contract plans.
  • Certain providers, such as giffgaff, offer even greater flexibility as they allow you to change your package each month. This means that you can choose to spend less during months when you don’t need many minutes or data, and more in the months that you do. And giffgaff will tell you whether you can comfortably downgrade your package based on your usage.

While these are the most popular types of plan available, they are by no means the only ones to choose from. Mobile phone companies create new models from time to time, such as the one below.

Innovative plans

Vodafone Pay As You Go 1

  • Vodafone’s Pay As You Go 1 plan offers unlimited minutes and texts, plus 500MB of data each day with a daily spending limit of £1.
  • This plan operates on pay-as-you-use basis, meaning that if you don’t use your phone at all, you won’t be charged a penny. If you send one text a day, you just pay Vodafone’s rates of 20p per text. It’s then 20p per minute for calls, and 20p per 5MB of data.
  • After you reach £1, everything else is free for the rest of the day. So if you spend an hour on a call, it will never cost you more than £1.
  • This plan is a good choice for those who rarely use their phone, and only use it for calls or texts a few times a week.
  • If you use your phone regularly, this is likely to be a more expensive option than other plans.

Are you an older person who wants to know more about mobile phone plans suited to your lifestyle? Take a look at our guide to the best mobile phone plans for seniors.

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Matthew Boyle is a banking and mortgages publisher at Finder. He has a 7-year history of publishing helpful guides to assist consumers in making better decisions. In his spare time, you will find him walking in the Norfolk countryside admiring the local wildlife. See full bio

Matthew's expertise
Matthew has written 244 Finder guides across topics including:
  • Helping first-time buyers apply for a mortgage
  • Comparing bank accounts and highlighting useful features
  • Publishing easy-to-understand guides
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