SIM only vs contract phone: What’s the difference?

Dan Howdle • August 28th, 2024

With the constant stream of enticing offers from mobile networks, it can be challenging to decide whether to opt for a contract that includes a phone or to go with a SIM-only deal and keep your existing handset. Both options have their advantages and disadvantages, so let’s explore what might work best for you.

In this guide, we’ll break down the pros and cons of both contract phones and SIM-only deals, helping you to make an informed decision based on your needs and financial situation.

What’s the difference?

Before diving into the details, it's important to clarify the fundamental difference between a contract phone deal and a SIM-only deal. Both are contracts between you and a mobile network, but with a contract phone deal, you're also purchasing a handset, typically paid off in monthly installments. A SIM-only deal, on the other hand, provides you with a SIM card offering data, calls, and texts, but no handset.

SIM only

Pros

Lower monthly cost
Flexibility to upgrade your phone whenever you want
Shorter contracts, often rolling on a 30-day basis

Cons

You need to own a phone or buy one outright
Potentially high upfront cost for a new handset
Some older phones may not support the latest features

A SIM-only deal offers a lot of flexibility and typically comes with a much lower monthly cost compared to a contract that includes a handset. With SIM-only, you’re simply paying for your data, minutes, and texts. This is ideal if you already have a phone that you’re happy with or if you prefer to buy your phone outright and avoid long-term financial commitments.

One of the main benefits of a SIM-only deal is the ability to switch networks or plans easily. Many SIM-only deals are available on 30-day rolling contracts, so you’re not tied into a lengthy agreement. This flexibility allows you to take advantage of new deals or better coverage from another network without waiting for a contract to end.

However, the downside is that you need to own a handset or buy one separately, which can be expensive if you want the latest model. Additionally, if you’re using an older phone, it may not support newer technologies like 5G or the latest apps, potentially limiting your mobile experience.

Compare SIM-only deals

Contract phones

Pros

Spread the cost of a new phone over a longer period
Contracts often include upgrades and trade-in offers
Potentially beneficial for building your credit score

Cons

You don’t own the phone until the contract ends
Credit checks are required
Early termination fees can be high

A contract phone deal includes both the cost of a handset and the mobile service (data, calls, and texts). These contracts typically last between 12 and 36 months, allowing you to spread the cost of a new phone over time, which can make high-end devices more affordable.

One of the advantages of contract phone deals is that they often come with perks, such as early upgrades, trade-in deals, and sometimes even bundled services like streaming subscriptions. However, you should be aware that you don’t technically own the phone until you’ve made the final payment at the end of your contract.

Contracts require a credit check, so your eligibility depends on your credit score. Additionally, you’re locked into the network for the duration of the contract, meaning you can't switch providers without paying early termination fees, which can be substantial.

Compare contract phone deals

Who are they for?

Deciding between a SIM-only deal and a contract phone deal depends largely on your personal circumstances, including your financial situation and whether or not you already own a handset.

SIM only

If you already have a phone that you’re happy with, or if you prefer the freedom to change your handset and network whenever you want, a SIM-only deal is probably the best option for you. This is especially true if you can afford to buy a phone outright or if you prefer not to undergo a credit check.

Contract phone

If you want the latest phone but don’t want to pay for it upfront, or if you prefer the convenience of having your device and service in one package, a contract phone deal is likely the better choice. This option is also good if you’re looking to build or improve your credit score, as regular monthly payments can have a positive impact.

Frequently asked questions

Do I own my phone during my contract?

No, you do not own the phone during the contract. The phone is technically owned by the mobile network provider until the final payment is made at the end of your contract. Once the contract ends, and all payments are completed, the phone is yours to keep.

Does a SIM-only deal limit my data, calls, or texts?

No, SIM-only deals do not inherently limit your data, calls, or texts. You can find SIM-only plans that offer unlimited data, calls, and texts, just like traditional contract plans. The key advantage is that you’re not also paying for a handset, so the monthly cost is typically lower.

Can I get a SIM-only deal if my phone is locked to a network?

If your phone is locked to a specific network, you can still get a SIM-only deal, but it will need to be with the same network. If you want to switch networks, you’ll need to unlock your phone first. Most networks will unlock your phone for free or for a small fee, depending on your contract status.

What if I can’t keep up with my contract payments?

If you’re struggling to keep up with your contract payments, the first step is to contact your mobile network provider as soon as possible. Most providers have support systems in place to help you manage your payments, such as extending the contract length, reducing the monthly payments, or setting up a different payment plan. It's important not to ignore the issue, as missed payments can negatively affect your credit score.

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