Is it cheaper to buy a phone under contract or outright?

If you’re upgrading to a new phone, you have two main options. The traditional method is to buy one from a carrier or cell phone provider and sign up for a contract. This allows you to pay for the device over several months, usually over two years. In addition to the phone, your contract includes mobile data, calls and SMS.

Other options are to buy the phone from a retailer and pay all costs up front, paying separately for a mobile data plan.

With flagship phones being very expensive these days, the latter option may seem expensive, but it’s worth considering as you may find that over the two years of your contract you could have spent more than you didn’t think so.

Here are the pros and cons of each approach.

Are phone contracts good value for money?

Buying a phone on a contract is the norm for most people. Not only does this spread the cost of the device, but it’s just a done deal, another monthly bill that comes with streaming services, car insurance, broadband and other things.

This is good for a lot of people because it means you know what you’re going to pay each month and you can also benefit from good deals offering extra data, minutes or other bonuses such as free subscriptions to streaming services.

But what are you really paying over these two years? We’ll take a look.

British contracts

In the UK, at the time of writing, EE was offering the iPhone 15 for £34.86 per month on a 24-month contract with £30 to pay up front. This means the total amount you’ll pay for the iPhone 15 would be £866, which is £67 more than if you bought it directly from Apple (£799). It’s not a huge difference and would definitely be preferable for many people who don’t want to spend £800 on a phone in one go.

You’ll need to pair it with a data plan, such as Unlimited Data Essentials which offers unlimited calls, texts and data (capped at 100Mbps speed), which costs £35 per month (again for 24 months ).

Put them together and you get a grand total of £69.86 per month for 24 months, or £1,676.64 in total.

While I was writing this article, EE dropped the price of the plan from £35 to £24.50 (for a limited time), bringing the total price down to £1,387 over a 24 month period. Deals like this are constantly being offered by all the major networks, so you should always shop around and perhaps spend a few weeks looking for a deal rather than just spending a few hours. You could save a decent amount of money this way.

Here are more best iPhone 15 contract deals:

The alternative approach is to buy an iPhone 15 directly from Apple (or other retailers) for £799. For comparison purposes, EE offers the same Unlimited Data Essentials plan as a SIM-only plan for £30 per month. Add the two together and you get a total price of £1,519 (£799 + £720), saving you a not-insignificant £157.64 for the same contract and device.

The savings are greater if you don’t get your SIM card from one of the major UK operators (EE, BT, Vodafone or Three) and instead use a piggyback network which simply uses these same networks. For example, Lyca Mobile runs on the EE network and, at the time of writing, offered an unlimited plan for data, calls and texts, for £18 per month for 12 months.

Over two years your total bill would be £1,231 (that’s the iPhone 15 at £799 and 24 months of paying Lyca £18 per month (£432). That’s a saving of £445.64 over two years compared to buying the same phone with an EE contract.

This is of course just one example, and you’ll find plenty of other options in our roundup of the best SIM-only deals.

You don’t have to buy an iPhone from Apple either, and many retailers were offering £50 off. The combination of buying direct (at a discount) and using a piggyback network is therefore almost £500 cheaper than the contract option we started with. That’s quite a difference, but it’s only possible if you have £749 spare to buy the phone in the first place.

Naturally, there are much cheaper phones than the latest iPhone, which can cost well under £200. Likewise, there’s no need to pay that much for unlimited data. If you only use a few gigabytes a month, there are plenty of great deals that cost around £5 a month… or less. In fact, if you’re currently paying more than £1 per GB, you can probably move to a cheaper deal and you can still keep your existing number.

Here is a selection of the best iPhone 15 deals currently available:

$829

$829.99

American contracts

What if you’re in the US and not the UK? How does the North American market compare to the UK market? Well, it’s quite different. Contracts don’t lock you in like in the UK, so you can take out something like a 36 month deal to spread the cost of the phone, essentially allowing you to stay with the provider for the duration of the repayments. You can buy phones unlocked and off-contract, but it’s rare.

Sticking with the iPhone 15, you can buy one from Apple for $799 if you’re on a contract with AT&T, T-Mobile, or Verizon, but if you want the phone unlocked (so you can use it with another operator later). ) then it costs an additional $30.

Apple

You can’t buy an iPhone 15 on Amazon in the US and, at least for now, discounts from other retailers are rare.

One of the best deals comes from Visible (owned by Verizon) which offers unlimited data, talk and text for $20 per month on a 24-month contract. That means if you were to buy an unlocked iPhone 15 from Apple and sign up with Visible, you’d pay $1,309 ($829 + $480) over two years.

Visible

You’ll find more in our roundup of the best Bring Your Own Device plans.

The iPhone 15 is also available on a 36-month contract from Verizon, priced at $23.05 per month, meaning you pay no more than if you bought it off-contract directly from Apple .

This will need to be combined with a Bring Your Own Device plan. One example is AT&T’s Unlimited Starter which offers unlimited data, talk and text, plus 3GB of hotspot data for $65 per month.

Simply put, the easiest and best option in the US is to buy a phone on contract.

In the UK you can save a lot of money by buying a phone and getting a cheap SIM only deal. You may miss out on some of the bonuses offered by big names like EE, but you’re unlikely to save anything even if you’re tempted by, say, a free Apple TV+ subscription or whatever they propose.

Remember that there is also another option. Instead of buying a brand new phone, consider a refurbished phone. It’s not just better for your bank balance: it’s also better for the environment.