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Is A Sim-Only Plan Better Than A Cell Phone Contract?

An important question for travelers.


When you go into a phone shop, it will only be a matter of moments before a pushy salesperson descends on you and starts trying to get you to sign up to a 24 month cell phone plan. Most people have their phone on a contract, which includes the phone as well as the service, but it may not actually be the best option for you.

A lot of people don’t even realize that there are other options available, like sim-only deals. Instead of paying a monthly cost that covers your cell phone plan and the cost of the handset, you can just pay for a sim card and buy a phone separately. This option might not be ideal if you cannot afford to buy a phone outright, but a lot of people are switching over to sim-only plans because they are often cheaper and you get a lot more flexibility there.

If you are coming towards the end of your contract and you are looking for a new phone, you should spend some time looking at the different options and considering a sim-only plan. If you are trying to decide between contract plans and sim-only deals, here are some of the pros and cons of each.

Pros And Cons Of Sim-Only Plans 

SIM Cards

When you take out a sim-only plan, you do not pay for the handset, you just pay for the cell service plan. That means that the monthly costs are significantly lower than they would be with a contract plan. However, you do need to pay for the cost of the handset up front, which can be expensive. If you have the money to buy a new phone, you will save money in the long run by going for a sim-only plan, but some people do not have the money to do that and they will need to go for a contract plan instead.

If you do want to save money, you can always buy a second hand phone for a much lower price. Phones do not change that much in terms of functionality from year to year, so if you buy a phone that is a few years old, it will still do everything that you need it to do, but it will be way cheaper.

When you buy your own phone instead of getting one on contract, it will be unlocked. That means that you can use any network on it, but if you get a contract, you will be locked into a single network unless you pay to get the phone unlocked.

Sim only plans are usually rolling month by month, which means that you can always switch to a better deal if you can find one, and you will be able to use that new sim in your unlocked phone, so you can make even bigger savings.

The data plans that are available on sim-only tend to be better as well. If you check out this smarty mobile review, for example, you’ll see that you can actually get money back for any data that isn’t used, so your monthly costs will be even lower if you use your phone sensibly. If you use a lot of data, you can always find sim-only deals with large data allowances, so you never run short.

One of the other main benefits of a sim-only plan is that you can sign up without a credit check. When you go to get a contract phone, they will always run a credit check and if you have poor credit, you may not be able to get a contract at all. Even if you can get a contract, you may have to pay a higher monthly cost.

Sim-only deals are also the only way to get a pay-as-you-go phone plan. These are nowhere near as popular as they used to be, but they are good for people that are trying to stick to a tight budget and only want to use their phone for emergencies. You only pay for the calls that you make, instead of paying a monthly cost for a phone that you are not using.

The bottom line is, sim-only plans tend to be a lot cheaper than a contract where monthly costs are concerned. However, you do need to have the money to buy the phone in the first place, and that is an issue for some people. Sim-only plans are also a lot more flexible and you are not tied into a contract, so if you find a better deal elsewhere, you are free to change and save yourself some money.

Pros And Cons Of A Contract Phone


If you take out a contract phone, you will usually be tied in for a year at least, and some contracts run up to two years. If you want to get out of that contract, you will usually have to pay a lot of fees, which add up to the remaining cost of the contract. That means that you have a lot less flexibility compared to a sim-only plan, and if a better deal comes along, you are not able to take advantage of it.

The monthly costs of a contract phone are almost always higher as well because you are not just paying for the cell service, you are also paying off the cost of the phone as well. Over the length of the contract, the total price is more than it would be if you just bought a phone outright and then found a sim-only deal.

However, the initial upfront costs are far lower because you only need to pay the monthly bill. Some new phones can cost as much as $1000, so being able to get it without having to cover that initial cost is a big benefit, as long as you don’t mind paying a bit more overall. If you are in a rush to get a new phone and you don’t have time to save up the money, a contract might be the best option.

You will also be able to get an upgrade at the end of each contract period and negotiate a new contract. This is good for people that need a new phone regularly. For example, if you need a cell phone for business, you can’t get by with an outdated phone that is slow, so you need those regular upgrades. A contract is a better choice if you plan to replace your phone on a regular basis because the costs are spread out and they are a lot more manageable.

Cell phone contracts may also come with extra deals that improve the value. For example, a lot of cell phone plans also offer a tablet or laptop if you pay a little bit extra each month. If you compared this with the cost of buying those devices separately, you may find that it’s a good way to save money. Some cell phone providers also offer internet plans as well, and if you roll it all into a bundle, the total cost is lower.

Families can benefit from joint plans when taking out cell phone contracts as well. If you all go with the same provider, you will get a combined allowance of calls, messages, and data to use each month. The cost of these family plans tends to be a lot lower than the cost of separate contracts, and that isn’t an option that you have if you go sim-only. The only problem with these family plans is that you could use your allowances up too quickly if certain family members are using their phone a lot more than the rest of you. If you are going to take out a family plan, make sure that you get one that suits your needs and monitor everybody’s use so you don’t overspend.

In general, contract plans are more expensive overall but you do not need to pay the cost of the phone upfront. This means that the cost is a little easier to manage and you have more choice of phones. But you are tied in for a year at least, and you can’t get out of the contract without paying a large fee, which means that you might miss out on some better deals.

It all depends on your personal situation, and it is important that you consider how you will use the phone, and what your financial situation is when you are trying to choose between sim-only and contract. If you want the most cost effective option and you are not bothered about getting the latest phone, a sim-only is the best option. You may need to go for sim-only if your credit rating is bad as well because you won’t pass the credit check to get a contract phone. On the other hand, if you want to get the latest phone, it may not be affordable unless you go for a contract phone.

Next time you are due for an upgrade, make sure that you weigh up all of your different options and consider sim-only as well as contract phones.

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