# SIM-only vs phone contract: which saves you money?

> Bills & utilities · Last updated 23 June 2026

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## Quick answer

SIM-only deals are almost always cheaper than phone contracts because you are not paying off a handset. Buy a phone outright (or keep your current one) and pair it with a SIM-only plan to save £200–£400 over a typical two-year period.

Phone contracts bundle a handset and airtime into one monthly payment, making the phone cost invisible. SIM-only plans sell just the airtime — minutes, texts, and data — at a lower monthly price. For most people, buying a phone separately and choosing SIM-only is the cheaper long-term option.

## Key facts

- SIM-only plans typically cost £8–£25 per month for generous data allowances
- Phone contracts bundle handset repayments, often adding £20–£40 per month to the airtime cost
- SIM-only contracts are usually 30-day or 12-month — shorter commitment than 24-month phone deals
- Buying a mid-range phone outright (£200–£400) and using SIM-only saves money over two years

## Cost comparison

A phone contract at £45 per month over 24 months costs £1,080 total. The same phone bought for £300 plus a £15 SIM-only plan costs £660 over 24 months — saving £420.

SIM-only plans from the same networks offer identical coverage and speeds. The only difference is you are not financing a handset.

## When a phone contract makes sense

Contracts can suit people who want the latest flagship phone without a large upfront payment and who do not mind paying more overall.

Some contracts include insurance and early upgrade options that may suit people who drop or lose phones frequently.

## Switching to SIM-only

When your phone contract ends, do not auto-renew. Your handset is paid off, so switch to SIM-only and keep the phone.

You can keep your number by requesting a PAC (Porting Authorisation Code) from your current provider and giving it to your new SIM-only provider.

## Mid-contract price rises and social tariffs

From 17 January 2025, new mobile contracts must show any in-contract price rises in pounds and pence at sign-up — not CPI-linked formulas. If your provider increases your bill beyond what was disclosed, you may be able to leave penalty-free under Ofcom rules.

If you receive Universal Credit, Pension Credit or certain other benefits, check whether you qualify for a mobile social tariff (often £10–£15 a month). See our quick answer on mobile social tariffs and compare with broadband social tariffs if you need both.

## Frequently asked questions

### Can I use any phone with a SIM-only plan?

Yes, if the phone is unlocked or locked to the same network. Check compatibility — most modern phones work on all UK networks.

### Is SIM-only credit checked?

Some providers credit-check for 12-month SIM-only plans. 30-day rolling plans usually do not require a credit check.

### What happens when my phone contract ends?

You have paid off the handset. Switch to SIM-only immediately — continuing on the same plan means you are paying for a phone you already own.

## Primary source

https://www.ofcom.org.uk/phones-and-broadband

## Related

- [How to switch mobile network](https://moneyguide.org.uk/how-to/switch-mobile-network/)
- [What is a SIM-only deal?](https://moneyguide.org.uk/answers/what-is-a-sim-only-deal/)
- [Mobile social tariffs](https://moneyguide.org.uk/answers/what-are-mobile-social-tariffs/)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.