Your Monthly Phone Tariff
For people who use their mobile phone quite a lot and are happy to commit to a contract, a monthly tariff usually works out as the best deal compared to a prepay arrangement. The key difference is that you pay after you've used it, whereas with Pay As You Go (PAYG) you pre-pay for the calls, topping the phone up with an amount of credit that you can then use until it runs out.
More Features Than PrepayMonthly contract users used to get a lot more features than prepaid phone users but the gap has narrowed in recent years. Voicemail and international calling are two examples of features that were exclusive to contract users but can now be had on prepaid phones too. In the early days of mobile phones the monthly tariffs were aimed at business users while prepay tended to be for consumers but now there's now real distinction.
All monthly contracts come with a call and text allowance. This determines the number of call minutes or SMS messages you can use before you start to incur extra charges. Usually, the higher the monthly charge and the greater the number of minutes and texts, but it does also depend on the value of the phone that comes with the tariff.
Phones, Upgrading and Free GiftsThe general trend is that a charge will be levied for a new, feature-rich phone, but the same tariff can be had with a free phone, although it will be an older model without the most up-to-date gadgets. Sometimes the monthly charge will be higher if a higher-spec phone is desired, rather than a lump sum being charged for the phone up front. The choice depends on whether the phone or the tariff is the most important element of the deal.
One of the things that attracts people to monthly contracts is the option to upgrade to a new phone as the contract comes to the end, which allows people to get the newest phones as they come out. With competition getting hotter to keep consumers locked-in rather than switch, contracts are getting longer, with 18 month and 2 year contracts now common.
A relatively new complication with comparing tariffs is the trend for offering high value gifts to new monthly tariff customers, such as games consoles, coffee makers or even laptops. So now you have to take the value of the gift into consideration as well, although it's only really valuable if the gift is something you were considering anyway. As there's no such thing as 'free' anyway, you are likely to be paying for the gift in higher monthly charges or smaller call and text allowances.