Million overpay for mobile deals on phones they’ve already paid off

According to Virgin Media O2, millions of households are overpaying £530 million a year for their mobile phone contracts.

The telecom company said 93 per cent of Britons have no idea their provider can continue to charge them for a device they’ve already paid for.

This problem hits the elderly and those on the lowest incomes the hardest, according to Virgin Media O2.

The problem is that consumers often don’t know how two parts of their cell phone bill work: their device payments and the cost of airtime.

Some cell phone companies bundle the two components together, while others charge for them separately.

Neither is a problem until the device is paid off – normally within 12 to 24 months.

What happens next depends on your deal.

If you pay for your device and credit separately, you’re free to pay for the credit only – reducing your bill – or your carrier can automatically switch you to a credit-only rate.

But if your tariff bundles your device and airtime payments, you may be stuck paying for a handset you already own outright.

Most people who overpay don’t do so for more than six months, but many do for years.

However, bundled deals can be cheaper initially than split rates, making it vital for consumers to check their monthly payments once their device is paid off.

Virgin Media O2 said this affects millions of people every year.

According to consumer organization Citizens Advice, 58 percent of the average monthly mobile bill is the cost of the device.

In other words, once the device is paid off, more than half of millions of Britons’ phone bills will be some form of overcharge.

Gareth Turpin, chief commercial officer at Virgin Media O2, said: “We are calling for time for this half-billion pound problem and urging the industry to stand up for consumers and put an end to the scam with smartphones.

“During a cost-of-living crisis, and with older and low-income households most at risk, I ask the other operators to do the right thing.”

In 2020, regulator Ofcom introduced new rules requiring mobile phone, broadband and pay TV providers to warn customers when their current contract is about to expire and what they could save by signing up for a new deal.

Ernest Doku, telecoms expert at comparison site Uswitch.com, said: “VMO2’s investigation into mobile phone overpayments highlights an issue that we’ve been talking about for years and is now more important than ever.

“Too many people are still overpaying on their mobile bills, and it is very worrying that the elderly and those on the lowest incomes are disproportionately affected.

“More needs to be done to make consumers aware of the contracts they sign and, more importantly, their options when they end.”

A spokesman for BT, which also owns EE, said: “We find these claims by Virgin Media O2 misleading and unnecessary – intended to chase the headlines, at a time when consumers need to be able to trust that the industry is clear and straightforward. it.”

Airtime-only customers punished with price hikes

Mobile phone users have seen hefty price hikes of up to 17.3 percent this year, even on airtime-only deals.

One quirk of how many broadband and phone deals have worked since 2021 is that prices can be increased mid-contract.

Earlier this year, Ofcom said consumers do not understand how these price increases work and it may need to crack down on mobile and broadband price increases.

However, Ofcom has no plans to make these deals any cheaper – just to make sure consumers understand how the prices work.

How to save money on your cell phone plan

1) Figure out what you REALLY need

These deals vary in terms of what you get and what you’re charged. If you’re at the end of your plan, or about to take out your first plan, think about what you really need for a mobile phone deal.

If you’ve paid off your handset and would like to keep it, check that you’re not locked into paying a higher rate than necessary.

2) Consider a Sim Only deal

If you already own a mobile phone or can get one cheaply, you might be able to save money with a cheap Sim Only deal.

This is because most cell phone contracts sell you two things: the phone and the usage fee. If you already have the phone, all you have to worry about is the cost of calls, texts, and data.

Uswitch said customers can save up to £321 by taking a Sim-only deal.

Users must ensure that they do not exceed the limits stated when signing up. If this is the case, there may be additional charges – and they can be expensive.

3) Consider a refurbished phone

Instead of buying a brand new phone, see if there’s a refurbished phone that’s right for you. These are phones that have been refurbished by experts to replace broken parts and improve their operation.

They are significantly cheaper than new phones. For example, an iPhone 13 costs around £600 to £700 for a new handset, while refurbished models cost around £500.

These savings are even greater for lower-demand phones or older models.

Most Samsung Galaxy phones released in the last five years normally cost no more than £200 when refurbished, for example, but cost up to four times as much new.

4) Be prepared to haggle

If your existing contract ends, haggling with your provider can save you money.

Do your research first and get ready with some of the best deals you’ll find elsewhere. Mention any issues you’ve had with your current provider, as this can give you an edge in any negotiations.

If you’re not happy with the offer your provider is making, say you’re willing to leave. This can miraculously lead to better deals appearing.

5) Be prepared to switch

If you can’t get a deal you’re happy with with your current provider, consider switching.

6) Check if you can get a social rate

There are three social tariffs for mobile phone customers. Sim-only deals can be cheaper, so even if you qualify for a social rate, you should look into that as well.