Martin Lewis has issued a warning to 14 million people who may be unaware they’re overpaying on their mobile phone contracts. The financial guru shared the alert on his Money Show last night, explaining what people can do to save “hundreds” of pounds a year.
In April, mobile contracts will rise by roughly 6% or £2 per month, depending on a person’s contract. While regulator Ofcom has banned mid-contract inflation-linked price hikes, these new rules only apply to people with new contracts, typically launched from January onward. People with these new contracts would have been told how much in pounds and pence their bills would rise in April.
Yet many, “probably most” people are on existing contracts taken out before January, which means they will still face the inflation-linked price hikes this year. However, millions of people are thought to be “out of contract” without knowing, which means they may be able to avoid the increase.
People become “out of contract” when they finish paying off their handsets. When this happens, Mr Lewis said people’s bills “should plummet” as they’d only be paying for airtime costs after that point. However, despite this, mobile companies continue to charge the same amount every month.
Mr Lewis told ITV viewers: “My big message is that 14 million of you out of contract are free to ditch, switch or move.”
Mr Lewis explained how to check: “The first thing to do is text INFO, for free, to 85075. If you’re on Three, iD Mobile or Smarty, customers will need to confirm their date of birth in a reply.
“It will then tell you if you have any early termination or cancellation charges. You need those to be £0. That means you’re out of contract and can ditch and switch for free.”
If you find you are out of contract, there are ways to secure a better price on a new SIM-only deal.
Mr Lewis said: “Don’t go directly to the companies, they’ll always charge you more. The best deals are always on comparison sites where they offer short-term promotions. Some have vouchers or bill credit.”
Mr Lewis then shared a raft of cheap SIM-only deals currently available with unlimited UK calls and texts, such as Lebara, which offers 10GB of data at a cost equivalent to £2 to £5 per month, or Smarty, which offers unlimited data at a cost equivalent to £10 to £15 per month.
Mr Lewis added: “Most people are massively overpaying. SIM prices have gone down every year. Five years ago, a 50GB SIM was £13 per month – now the cheapest is £3 per month, but every year, you’ve got above-inflation price hikes if you’re on a contract. Switchers get the best deals.”
When deciding which SIM to buy, Mr Lewis suggested customers determine whether they want the same network or signal.
You’ll need to haggle if you want to stay on the same network. For those who are just after the same signal, Mr Lewis explained that there are only four mobile phone companies in the UK: EE, O2, Vodafone, and Three.
He continued: “Every other one is piggybacking on their signal. Like Lebara’s on Vodafone or Smarty’s on Three. So, what you can do on some of the good comparison sites is you can tell it what signal you want, and it’ll find you the cheapest provider on that signal.”
For those who want to keep their number when they switch, simply text PAC to 65075. Mr Lewis said: “You’ll get a code to give to your new provider; that way, you’ll keep your existing number.”
One pensioner managed to save a staggering £816 in one year after switching to a SIM-only deal. Sharing his success story on the show, Steve said he was previously paying £71 per month for his contract. After transferring to SIM-only with another provider, Steve saw his bill drop to a bargain 65p per month for nine months before rising to £9.90 for the last three, making his bill an average of £2.97 for 12 months.
Mr Lewis said mobile companies charging the same amount despite customers paying off handsets “should be banned, but it isn’t, which is why people get in those [out of contract] situations.”
