36 month phone contracts explained: are they worth it?
Choosing the ideal phone contract length varies from person to person, and can depend on a number of different factors.
Although 12 month phone contracts used to be the most common length, these have generally been phased out for longer 24 and 36 month contracts.
This is mainly because smartphones have become increasingly more expensive, meaning the monthly bill for a 12 month contract would be ridiculously high and unaffordable for most people.
As a result, 36 month contracts are increasingly becoming the new normal. But are they worth it, and do they end up costing consumers more in the long run?
Although 36 month phone contracts seem like an attractive offer, they can be a long term commitment for most people.
In addition, unless you’re on a network that offers early upgrades, you may be stuck with the same phone for 36 months.
Furthermore, 36 months is a long time. It’s not inconceivable for your financial situation to change during this period, which could possibly see you struggling to pay the required monthly bills further down the line.
36 month phone contracts: the new normal
Although Ofcom have introduced rules that prevent networks from offering contracts for longer than 24 months, most providers are still able to offer 36 month contracts through a rather smart loophole.
By splitting the contract into two separate parts, networks can offer a 24 month contract for the tariff (also known as airtime), and a separate 36 month loan for the device or phone.
Essentially, with 36 month phone contracts, you are taking out two contracts - one for the tariff, and one for the phone.
After 24 months, you have the option to continue and renew your tariff contract, or you can choose to cancel and switch to a different network.
However, even if you cancel your tariff, you must continue to pay for the device for the whole 36 months.
Since December 2021, Ofcom rules mean networks can no longer sell phones that are locked to a particular network.
As a result, even if you cancel your tariff and switch networks after 24 months, you can still continue to use your phone with a different SIM card from another network.
36 month contracts have become increasingly common in recent years because smartphones have become much more expensive. The latest Apple iPhone 14 and Samsung Galaxy S23 can cost upwards of £1000.
With 12 or 24 month contracts, this amount will need to be split over a short period, which can result in very high monthly bills.
By splitting the cost over a longer 36 month contract, networks can offer lower monthly payments for consumers, which is generally more feasible and manageable for most people.
36 month contracts are a very attractive option, and have increasingly become the new normal, particularly during the ongoing cost of living crisis in the UK.
36 month phone contracts are offered by most networks, including Sky, Tesco Mobile, O2 Vodafone, Three and Virgin Mobile.
Common misconception: 36 month phone contracts are more expensive
It’s easy to believe that 36 month phone contracts can be more expensive in the long run. However, this is generally a common misconception, as they often don’t cost any more compared to 12 or 24 month contracts.
Our research has consistently shown that the total cost you pay for the device of your contract is more or less the same between 12, 24 and 36 month contracts.
For example, let’s take a look at the Samsung Galaxy S23 Ultra on O2.
With a 24 month contract, O2 are offering the Samsung Galaxy S23 Ultra with a £30 upfront cost at £50.80 per month, for a total cost of £1249.20.
With a 36 month contract, this has the same £30 upfront cost, but for a monthly cost of £33.87 per month, for a total cost of £1249.32.
The total cost between both 24 and 36 months contracts is pretty much identical - just a 12p difference between the two durations.
Similarly, Vodafone offer a 24 month contract for £49 upfront at £49.50 per month, for a total cost of £1237.
The total cost is identical with a 36 month contract - £49 upfront at £33 per month for a total cost of £1237.
In addition, with all the above examples, we’ve found most networks do not change the tariff cost depending on the contract length you choose- it consistently remains the same.
Mid-contract price rises only apply to the tariff with 36 month contracts
Most networks now have mid-contract price rises for their phone contracts, which is meant to account for inflation.
However, with 36 month contracts, the device and tariff are split into two separate agreements. Only the tariff is affected by mid-contract price rises.
This means the device agreement of your contract is not affected by any price rises, and will remain the same for the entire 36 months of your contract.
As a result, the amount you will pay for your device will always be the same from when you first signed your contract. You won’t end up paying more than expected in the long run.
In addition, since the tariff agreement is only for 24 months with 36 month phone contracts, you can choose to cancel your tariff and switch networks after 24 months if the mid-contract price increase becomes too expensive.
Pros and cons of 36 month phone contracts
- Smaller monthly payments
- More attractive and feasible for most people
- Tariff agreement is only for 24 months
- Total cost of the device doesn’t work out more expensive compared to 12 or 24 month contracts.
- 36 months can be a long term commitment
- You may be stuck with the same phone for 36 months, as not all networks offer early upgrades
- Your financial situation can easily change during 36 months, and you may struggle to keep up payments
In conclusion, 36 month contracts are usually worth the longer length for most people, and generally aren’t any more expensive compared to 12 or 24 month contracts.
By splitting the contract over 36 months, most consumers can benefit from smaller, manageable payments when compared to shorter term contracts.
36 month phone contracts are split into two separate agreements - one for the device, and one for the tariff.
The device agreement on the contract is nearly always the same total cost across 12, 24 and 36 month contracts, meaning you won’t end up paying any more with a long term 36 month contract.
In addition, the tariff agreement on your contract will only last for 24 months, meaning you can switch or change networks before 36 months are over.
However, since not all networks offer early updates, you may be stuck with the same phone for 36 months. Some people prefer to upgrade at least every 2 years.
Therefore, it entirely depends on your needs, and what you are looking for in a phone contract.