When choosing a new mobile phone contract, you typically have two choices: SIM-only deals or a monthly contract. It’s not always an easy decision to make, especially because comparing both options next to their monthly costs may not be enough to sway you one way or the other.
Looking at the Competitors: SIM-Only vs. a Monthly Contract
Before looking at the pros and cons of both competitors, let’s examine the key features of SIM-only plans and monthly contracts, including their upfront costs and functionality.
What is a SIM-Only Plan?
A SIM-only plan sets the amount of data you can use, the number of calls you can make, and the amount of text messages you can send every month. These plans are either pay-as-you-go, where you buy the services you need monthly, or prepaid, where you pay for the service upfront.
There are several affordable SIM-only plans you can take advantage of, but it’s best to stay away from unlimited because they’re expensive. SIM-only plans are pretty flexible because they’re offered as rolling monthly contracts, meaning you can cancel anytime without charge.
What is a Monthly Contract?
A traditional monthly contract locks you into a provider and/or mobile phone model for a specific length of time, usually for 1 to 2 years. If you cancel early, you’re subject to large fees, and you’ll have to pay off the rest of your mobile phone if you include a new phone in your contract.
Monthly contracts also come as pay-as-you-go, prepaid, or unlimited, but most users will choose packages with unlimited minutes and text messages. Unlimited data plans can be expensive, but almost all of the cheapest plans come with some “free” data usage.
Weighing the Pros and Cons of SIM-Only vs. a Monthly Contract
Monthly contracts are a more common option for mobile phone users, making them widely available, but SIM-Only plans shouldn’t be overlooked, especially if you’re a frequent traveler.
Why Should or Shouldn’t You Get a SIM-Only Plan?
SIM-only plans are cheaper and don’t require you to stay in a lengthy contract. Since you can pop your SIM card in and out of your phone, you aren’t shackled to a single mobile model or brand for 12 to 24 months. SIM-Only plans don’t require a hard credit check to sign up.
While SIM-only plans offer flexibility at a low cost, they can soon become more expensive if you aren’t careful. If you want to insert your SIM card into a new phone, you have to make sure it isn’t tied to a provider. SIM-only plans don’t have unlimited data plans widely available.
Although SIM-only plans can’t help you build credit, and they won’t give you access to new mobile phone models at a low cost, they’re ideal for users that don’t like being tied down. You can completely customize your plans and cap your usage, making budgeting easy.
Why Should or Shouldn’t You Get a Monthly Contract?
The biggest benefits of a monthly contract are their low upfront costs and access to new phones that may be financially out of your reach. Many networks offer rewards and free gifts as an incentive to sign up. Plus, making payments on time can improve your credit rating.
With that in mind, your provider will have to run a hard credit check on your account, which could make you ineligible to sign up for a contract. Monthly contracts are more expensive than SIM-only plans, and they don’t cap your usage, meaning you could be hit with a high bill.
Although you’re tied to a single provider for up to 2 years, you may want a monthly contract if you want to save more money over the long term and you prefer to stay on top of new technology and mobile models. Monthly contracts are also helpful for building credit.
