Business

Difference Between SIM Only and Contract Deals

By Ryan Bradman | August 21, 2021

Table of Contents

We are a nation of mobile users with most of us being more reliant on our phones than ever before. With so many choices out there, it can be difficult to know whether you have chosen the right phone for you and if you have the knowledge of whether you are on the correct plan.

It is a popular discussion amongst mobile owners, if you should have a SIM only plan or a contract deal. Here is discussion on what makes the two different and which one could help benefit your budget more.

What Is A SIM Only Plan?

A SIM Only plan would provide you with a SIM for your handset. So, it is important to note that you should already have a handset before opting for this plan. Typically, with this plan you would receive a bundle of minutes, texts and data. You would then be charged a monthly fee for this bundle. If you are happy with your current handset then this can be a great option for you if you are looking to get a cheaper deal for your data allowance, texts and minutes.

What Is a Contract Deal?

If you opt for a contract deal with a provider then you are making a commitment which you must adhere to for a certain amount of time. Typically, a contract deal would last anywhere in between 12 to 24 months. However, some providers can offer longer time frames. With a contract deal you would be tied into paying a fixed fee every month. In return for paying this fixed fee you will get a handset. Like a SIM only plan you will get a set number of minutes, texts and data. If you are a tech lover and like to have the latest model of a new phone, then this could be a good option for you.

Advantages Of a SIM Only Plan

There are several benefits that SIM only plans can offer:

More Cost-Effective

Typically, SIM only plans tend to be a lot cheaper in the long run. Unlike a contract deal, you already have a handset, so you are not paying the provider for the cost of your phone. You will only be paying for your texts, minutes and data bundle. This can see a significant drop in your monthly phone bill. If you are not adamant that you need the latest phone every time there is a release then you could save yourself a lot of money by sticking with your current model and switching to a SIM only plan.

Freedom To Choose

When it comes to SIM only plans you don’t have to be tied to one provider for a long length of time. Providers like Lebara, offer SIM only plans that are as short as 30 days. So, if you don’t like the plan, you have the option to end it. It can be daunting to tie yourself into a deal that can last a matter of months and even years so having 30-day plans can give you reassurance that if it’s not right for you then it can be changed pretty quickly, which differs dramatically from contract deals.

You Can Stick with Your Preferred Handset

As briefly mentioned, in order to get a SIM only deal you will need to already own a handset. This is the ideal option for people who like the current make and model of their device and don’t wish to change it anytime soon. The process is simple as all you will need to do is swap out your old SIM for a new one.

If you are a budget-conscious individual then it can be best to stick with your current device for as long as possible. With the price of smart phones rising more and more each year, it can soon put a dent in your finances. Sticking with the same phone can allow you to benefit from cheaper bundles like the one SIM only plans can offer.

Credit Checks Are Less Daunting

Some providers may run a credit check on you. However, this tends to be less comprehensive than contract deals. Providers like Lebara require no credit check whatsoever so anyone is eligible to apply. This can help to take some of the stress off when choosing your provider and make the process run a lot more smoothly and quickly. This can be particularly useful if you are in need of quickly cutting your personal finances and saving yourself some money.

Advantages Of a Contract Deal

Contract deals differ in comparison to SIM only deals. However, there are also a number of benefits that contract deals can have for their customers:

Seen As Less Hassle

Many people see contract deals as less hassle. Once you are tied in with a contract you know what you are getting, and most people don’t have to think about it for a long time. Usually, with contract deals you can exceed your allowance and you won’t get cut off unless you have put a cap on your bill. However, you should note that running over your allocated allowance can add up and cause your bill to increase.

You should get a clear idea on what allowance you will need to avoid running the risk of increasing your monthly bill.

Can Get the Latest Handset

The rise of smartphones has soared dramatically over the past few years and now the latest releases can cost you a lot of money. Contract deals give you the option to get the latest releases at a more manageable cost by splitting up the payments monthly.

At the end of the contract, you can usually upgrade and trade your handset in for the most recent model. However, it is important to note that these monthly costs can still be quite high depending on what make and model of phone you are after.

Can Have a Positive Impact on Your Credit Rating

Contract deals can be a useful way to build on your credit score. If you pay your monthly bill in full and on time each month then you can benefit from this. It is important to note that you can be denied a contract deal after your credit history has been checked. So, if your credit history is poor then you may need to opt for a different tariff to save yourself the trouble.

Which Tariff Is Better?

There is no right or wrong answer to which tariff is the better of the two. It all depends on your personal situation and what it is you are looking to gain from your mobile. If you cannot live without the latest version of smartphone, then a contract deal could help you keep up to date with new releases by offering you a pay-plan that is more manageable than buying the phone outright.

However, if you are happy with your current phone and don’t feel the need to change it as often, then a SIM only plan can be cost-effective and help decrease your monthly phone bill. There are also a huge number of SIM only plans out there on the market. This makes it a lot easier for you to find a deal that is more suited to you.