Contract Phones Versus Outright PurchaseWHICH IS BEST FOR YOU?

Contract Phones: The Benefits• No big up-front spend

This is why most people sign up for a contract. A modern smartphone will invariably set you back $600 or more, and not everyone has ready access to that kind of money. Paying a fixed monthly fee makes financial planning easier.

• You can save money overall

If you’re already paying $60 a month for your mobile phone bill anyway, then getting a handset thrown in at no extra charge, or for an extra $10 a month, is going to look like a good deal.

• You might score other bonuses

Mobile phone companies like to reward loyalty; if your mobile phone contract is with the same company that provides your landline and/or your internet service, you’ll often score a discount on your overall bill.

Contract Phones: The Downsides• You’re stuck with the same phone for two years

Buying on contract will not give you the latest and greatest phone for long. With smartphone upgrade cycles measured in six months or less these days, your new pride and joy will seem like a positive dinosaur by the time your current contract ends.

• You’re stuck with the same network for two years

This can be an annoying trap if you move house or change jobs and discover that your favoured network is essentially non-existent in your new residence or workplace. That’s annoying, but you’re unlikely to get out of your contract because of it.

• Your phone will be network locked

Network locking means you can’t utilise a SIM from any provider other than your original supplier. That’s a potentially expensive nuisance if you head overseas and want to use a cheap local SIM for calls or data.

Buying Outright: The Benefits• You can upgrade whenever you like

Owning your own handset makes it easy to change phones whenever the fancy takes you. If you keep your phone in good condition and preserve the original packaging, you can potentially sell it second-hand and reclaim a high proportion of its value.

• No network lock

If you want to change providers, either locally or overseas, you can simply swap SIMs and get on with it.

Buying Outright: The Downsides• You have to cough up the cash up-front

Fact: not everyone wants to spend close to a grand to buy a new phone when there are other alternatives available.

• It can cost you more

If you buy your own phone but then sign up for a costlier contract or month-to-month plan, you might end up paying more than if you had been on contract. You’ll generally do better sticking to a cheaper pay-as-you-go (PAYG) plan, but that isn’t always an option depending on your network choice.

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