Price warning over flexible mobile tariffs
‘Flexi’ tariffs – offered by O2, Sky, Tesco and Virgin – were introduced to stop customers who are out of contract effectively paying again for the same handset by running two separate contracts for the device and airtime.
Once the device is paid off customers automatically just pay for the cost of minutes, texts and data.
But analysis by uSwitch.com shows phone providers are hiking up airtime prices for the convenience of not having to worry about paying twice for the same handset.
The comparison site found mobile customers on ‘flexi’ tariffs could find themselves paying £69 extra a year on airtime alone – 38% more than they need – when compared to the cost of a SIM-only deal from the same provider.
Ernest Doku, mobile expert at uSwitch, said: “On the face of it, these contracts have two main appeals – they give customers the ability to upgrade to the latest smartphones early and they take away the risk of ‘double paying’ once the device part of the contract ends.
“The issue is that once customers are only on the airtime part of the deal, they are often paying a significant premium compared to similar SIM-only deals and this is before you consider that this deal was likely taken out two years ago when the cost of data is likely to have been a lot higher.
“The fact that these deals reduce the risk of customers paying inflated out-of-contract prices is commendable – but they’re far from the best value deals, even with the same network.”
Phone providers may soon be forced to tell customers when their contract is about to end.
Ofcom, the telecoms regulator, is due to consult on introducing ‘end of contract notifications’ to stop customers who do not switch being overcharged.
One in six mobile customers have fallen out of contract and are overpaying by a combined £27m a month, according to uSwitch.