What Is A Sim Only Deal

What Is A SIM Deal SIM only deals offer the convenience and value of a pay monthly contract with the flexibility of a pay as you go deal. Traditionally pay monthly mobile phone contracts have included both a phone and a SIM card with inclusive minutes and texts. These contracts typically included a minimum term of a year or increasingly eighteen months or even two years. Because the mobile network has to pay for the phone up front (usually at a cost of £200-£400) they have needed to ensure that you, their customer, will stay with them and continue to pay them high amounts for long enough for them to turn a profit.

This has a number of disadvantages. First and most obviously the network has to recoup of the cost of the phone over the contract so monthly prices are high and networks tend to limit their best deals to customers prepared to pay £35 a month or more. Secondly the network has to ensure that the customer will stay with them long enough for them to recoup their cost, hence the long term contracts that can tie you down. Thirdly and less obviously, they also have to ensure that you as a customer won’t take the phone and run and will continue to pay them throughout that contact so they have stringent credit checks in place which up to 50% of potential customers fail.

This state of affairs is far from ideal, it’s not great for consumers who have to pay high fees, sign up for a long term contract and possibly not be able to buy at all if they don’t have a strong credit record and it’s not great for the networks who have high upfront costs (the cost of all those “free” phones are hundreds of millions of pounds across all the networks every year) but until fairly recently the only real alternative for networks and consumers was pay as you go. Pay as you go deals avoid many of the problems of contracts but have their own issues. The need to top up frequently can be inconvenient and because networks aren’t guaranteed to make any money at all (many, many pay as you go SIM cards are never used at all or kept for emergencies with tiny annual spends) they tend to charge much higher prices for calls, texts and data usage.

SIM only contracts essentially fill the middle ground between traditional mobile phone contracts and pay as you go. Customers who take out a SIM contract get the benefits of a pay monthly deal but because a phone isn’t included the costs tend to be significantly lower (up to £20 a month less for equivalent deals) and in many cases there is no requirement to sign up to a long term contract – most deals are simply rolling 30 day contracts where you can leave at any point by giving 30 days notice. Also, because the financial risks to the networks are much lower credit checks tend to be much less stringent so many customers who couldn’t qualify for a deal including a phone can get the benefits of a pay monthly deal. The main benefit though is surely in the value for money. Compared to both traditional pay monthly contracts and pay as you deals the amount of minutes, texts and data that you can get for your money are much, much higher.

SIM only deals obviously don’t include a mobile phone with the contract but with the pace of innovation in mobiles slowing and many people happy with their current phone but looking for a better deal on their contract SIM contracts have grown significantly in popularity. Afterall, why would anyone want to pay several hundreds of pounds more over the life of a contract for a new phone if they are already happy with the one they have?

So to summarise, SIM contracts:

  • Fill the middle ground between traditional phone contracts and pay as you
  • Because the networks don’t pay for a phone up front they tend to cost less, have a much shorter minimum terms and less stringent credit checks
  • Usually offer the best value for money for minutes, texts and data
  • Are great for customers who are already happy with their current mobile phone