Mobile users waste £200 a year because of wrong contracts

MOBILE phone users in the UK are wasting almost £5 billion paying for contracts they do not use, a report has claimed.

The study by Billmonitor, an Ofcom-approved bill-analysis service, discovered the average mobile phone user pays 195 extra a year because they are on the wrong contract for their usage.

Just over three-quarters of people on monthly deals are paying over the odds, signing up to tariffs after wrongly estimating how many minutes and text messages they use.

And around half use just a quarter of their monthly allowance of calls and texts, having taken on tariffs which are too large for them, while 29 per cent are on too small a tariff, wasting money on calls, texts and data usage that exceeds their allowance.

Only 19 per cent have the correct number of allowance minutes, but are wasting money by not taking advantage of free benefits and allowance limits for data and texts, according to the study, carried out in conjunction with Professor Chris Holmes and Dr Nicolai Meinshausen of Oxford University.

Billmonitor, set up by mathematicians in Oxford, compiled the figures after analysing nearly 28,500 anonymous mobile phone bills and comparing them with 8.5 million contracts on offer from retailers and network providers.

The study found that the average person spends 439 a year on their mobile phone.

"These findings are a sharp reminder of the true cost of locking into what is often an extensive contract period without understanding whether the tariff is the right one," said Ernest Doku, a technology expert at the switching website uSwitch.com.

"Over the course of a contract consumers can be forking out a lot more than they really need to. In some cases, the network may suggest a more suitable deal, but you shouldn't rely on it.

"What's more, many mobile customers may not know that they are actually paying for the 'free' phone provided with their deal as part of their contract. In other words, they are effectively buying a phone on credit.

He added: "With so many deals now available, it's important that consumers take a step back from the hard-sell of mobile contracts and take time to consider what will work best for them."

Billmonitor discovered that customers spent 719 million a year calling premium numbers and sending premium-rate texts from their mobiles, while 502m was spent calling and texting while abroad and 1.36bn spent on roaming charges.

It added that the most costeffective contract length is 24 months, as opposed to 12 or 18. However, some customers may wish to pay more for a shorter-contract length, as they may want to avoid being locked into a contract for two years.

"Despite the common aversion to being 'locked in' to a contract for too long, it's inevitable that 24-month contracts will always be better value for the customer – with often disproportionately higher allowances than 18-month contracts," said the report.