I can no longer afford my phone contract. What can I do?
Whenever you take out a phone contract, you're committing to a long term agreement with the network, which is usually for 18, 24 or 36 months.
During this period, it’s not so far-fetched for your financial situation to change.
For example, you may become unemployed, or you may have been forced to switch to a lower paying job after losing your previous job. In addition, you might have to make a large payment or bill that you weren't expecting.
With the ongoing cost of living crisis and rocketing inflation, everyone is struggling to make ends meet. Furthermore, most networks have mid-contract price increases in line with inflation, as stated in the terms of their phone contracts. Given the current trend, this may mean your phone bill can increase up to 20% - a difficult increase for most people to stomach.
Such circumstances may affect your ability to continue paying your phone contract as normal.
However, you shouldn’t panic. There are a number of options and solutions to can take, such as coming up with a payment plan agreement with your network, or potentially downgrading your tariff.
Contact your network for a solution
If you’re struggling to pay your phone contract bill, the first thing you should do is contact your network.
Most networks have dedicated teams for those who are financially struggling.
They may be able to come up with a payment plan, which can allow you to split the payments into smaller amounts, over a longer period. They may also allow you to temporarily delay payments for a few months, until you have enough money to continue paying.
In addition, some networks may allow you to downgrade your plan to a cheaper tariff, even before your contract ends. A downgraded plan may have a smaller data allowance - see our guide on how to use less data.
Under exceptional circumstances, some networks may even allow you to cancel your contract early, while allowing you to pay a reduced early termination fee, or scrapping the fee altogether.
If your contract is coming to an end soon
If your contract is coming to an end within 30 days, you will be able to cancel your contract by contacting your network.
Alternatively, you can try to renew and upgrade your contract by haggling for a better deal. Most networks will do the most to keep you as a customer, even if that means giving you an exclusive deal. See our guide on getting a cheaper upgrade deal for more information.
You can even switch networks for a cheaper phone contract. By using a comparison website, you’ll most likely be able to find a cheaper deal on a different network, compared to the contract that you currently have. A recent increase in MVNOs means there’s more competition than ever, with much cheaper deals on the phone market.
Sell your phone but keep the SIM card
If you’re on a phone contract, it’s possible to sell your phone and just keep the SIM card.
You can then purchase a cheaper phone with the money you receive, and pair it with your SIM card to continue using your same phone number and allowances. Alternatively, you can use a spare phone that you might have lying around.
Any money remaining from the sale of your phone can then be used towards paying the monthly bills for your contract. You can even put the money in a savings account to earn some interest.
You can sell your phone to CeX or via eBay.
Don’t ignore the problem
The absolute worst thing you can do is bury your head in the sand and do nothing.
Failure to pay your phone contract will put you into debt. This will negatively affect your credit score, which can prevent you from taking out a credit card, loan or mortgage for the next 6 years.
Failure to pay may also see your debt passed onto a debt collection agency. You may also be issued with a county court judgement (CCJ), which will be held against your record for 6 years unless you pay the full amount within 1 month of the issue date.
Always try to contact your network first for a solution, such as a payment plan or downgraded tariff.
Cancel your contract if you’re not happy with the service
You have the right to cancel your contract within 14 days of taking it out, however you may also have the right to cancel if you’re not happy with the service you are receiving.
If you’re receiving a poor network signal, or the service is unreliable and continuously disconnecting, you may have the right to cancel your contract under the Consumer Protection Act 1987.
In addition, if the price of your plan increases mid-contract for more than the amount specified in the terms and conditions, you have the right to cancel within 30 days of your network informing you of the price increase.
For more information, see our guide on cancelling your phone contract early.
Know your rights
Whenever you take out a phone contract, you will be legally protected by certain rights, which your network must conform to.
Some networks split the contract into two separate agreements - one for the device (phone) and one for the tariff (SIM). Under such circumstances, the phone agreement will be regulated by the Consumer Credit Act, which gives you certain rights and benefits.
Such split plans are offered by the following networks:
- O2 Refresh plans
- Vodafone EVO plans
- Most Tesco Mobile plans
- Most Sky Mobile plans
Under the Consumer Credit Act, if you miss a payment, your network or provider must hand you a default notice and give you enough time to respond before they are allowed to take further action.
If you’re unhappy and you believe the network are not following the rules, you can make a complaint to the Financial Ombudsman Service to have your claim investigated further.
Furthermore, regulated creditors cannot use High Court enforcement officers to collect on unpaid debts (county court judgements).
How to pay less for your phone contract
Paying less for your phone contract is often possible, thanks to competition and various comparison websites.
With a comparison website, you can compare multiple deals from different networks side by side, which makes it far easier for you to find a cheaper phone contract. For more information, see our guide on using comparison websites to get a cheaper phone contract.
In addition, you may be overpaying for your contract if you use less data than your allowance. Monitor how much data you use, as you might find you can downgrade to a cheaper plan with less data. See our guide on how much data you need.
Furthermore, make sure to use Wi-Fi whenever possible, to save on expensive data costs. Always take advantage of free public Wi-Fi when you’re out and about.
In some cases, it’s possible to save money by buying a phone outright and pairing it with a 30 day SIM only deal.
If you don’t use your phone much or you use little data, you may find pay as you go to be a cheaper solution compared to a phone contract.