Getting a phone on a monthly contract or plan can be economical. You get a handset, and most service providers offer plans that cater to a range of users from occasional to frequent. In fact, there are so many plans and options available that it can be quite hard to compare and choose one that suits you.
There are a few things to know before you commit yourself to a contract that could save you being locked into a plan that doesn’t work for you, or receiving a high bill you didn’t expect.
Remember contracts are legal agreements. Be careful to check the terms and conditions - understand your rights and obligations before you agree to it.
Understand the jargon
Cap plans
Cap plans are contracts where you pay a minimum amount every month for a set ‘value’ of calls, SMS or mobile internet data – for instance a $50 cap plan may contain $300 of ‘included value’ or ‘allowance’ to use on calls, SMS and other services.
Cap plans do not limit the amount you spend. When you use up your ‘included value’, you’ll continue to be charged for any services you use.
Some types of calls and services are may not be part of your included value. Some plans may charge you extra for, picture and video messages, international calls, mobile internet data or other special services your mobile phone service provider may have. These extra services will usually appear on your bill as additional charges to your basic monthly payment.
Some companies may offer pre-paid caps where you get a certain amount of value for calls, SMS or mobile internet data. Unlike cap plans, you can’t go over what you have pre-paid.
Value
Be careful about comparing plans based on claims like ‘$50 per month for $300 included value’. Every plan has different call rates and includes different types of calls and services so ‘included value’ or ‘call allowance’ usually can’t be directly compared. For instance, low cost plans, may include higher charges for calls and SMS so you reach your allowance amount quicker and you’re likely to end up with a higher bill than you expect.
You have responsibilities, too
A phone plan is a contract. When you sign, you are entering a legal agreement to pay your monthly charges for the length of the contract. Even if you can’t make calls because you don’t have your phone or it’s broken, you still have to fulfil this commitment. You may also have to pay a penalty if you decide to leave part of the way through your contract.
Where can you use it?
Mobile phone coverage isn't always as good in regional and rural areas compared to big towns and cities. Some handsets are designed to be better at picking up mobile phone signals in these areas so if you need reliable coverage, ask the phone company which models would be best for you.
Pre-paid phones
If you don’t want to be locked into a long-term contract, a pre-paid mobile phone could be a good option - you only pay for credit when you need it. You can buy as much credit as you need, but be aware that it often must be used within a certain timeframe (often 30 days) or you lose any credit you haven’t used.
Bundling your phone & internet services
Many communications companies offer you deals and discounts if you sign up to more than one of their services. For example, you may be offered a discount on your home phone account if you agree to use the same company for your internet or mobile connection. This is known as 'bundling'.
Before signing up for a bundled service, there are few things you should consider:
Will you save money? Bundled packages can be difficult to compare, but checking your recent bills to establish your typical monthly costs and usage patterns can be a good starting point.
Many bundled arrangements lock you into a long-term contract, and you may have to pay a penalty if you want to leave early.
Are there hidden costs? Does the bundled package does have extra services charges, more expensive local calls or fees for exceeding your download limit?
Remember that contracts are legal agreements. Be careful to check the terms and conditions of the contract and understand your rights and obligations before you agree to it.
