SIM-only versus a phone contract
A bundled contract is a phone loan and a mobile plan sold as one number. Separating them is the only way to tell whether the number is a good one.
What is actually being bundled
A handset contract contains two things: credit for a phone, repaid monthly over the term, and airtime — the calls, texts and data. Some networks now split these explicitly into two agreements. Others quote a single figure, and the split is left for you to work out.
Once you see it that way, the comparison people usually make — “£45 a month with the phone against £12 SIM-only” — stops being a comparison. One of those includes several hundred pounds of hardware.
The arithmetic that actually settles it
Pick how long you will keep the phone. Then cost each route over exactly that period:
Buy outright, then SIM-only. The cash price, plus the SIM-only monthly for the whole period, minus what the phone is worth at the end.
Finance the handset, plus SIM-only. Any upfront contribution, plus the total repayable on the finance, plus SIM-only for the whole period, minus resale.
A bundled contract.Any upfront payment, plus the monthly for the term — and then whatever you pay after the term ends, for the rest of the period.
Keep the phone you have. SIM-only for the whole period, plus any repair.
Our SIM-only versus contract tool does all four at once, which mainly saves you from the mistake of comparing three of them and forgetting the fourth.
Why the period matters more than the term
Costing a 24-month contract over 24 months hides the most important thing about it: what happens in month 25.
A bundled contract does not automatically get cheaper when the handset is paid off. Unless you move to something else, you carry on paying the same amount for airtime that now includes a phone you already own. Meanwhile somebody who bought outright has been paying a SIM-only price the whole time.
Networks are required to tell you when your minimum term is ending, and the notification is easy to miss. A great many people are months or years past the end of a term they think they are still inside.
A lower monthly payment is not a lower total
Spreading a cost over more months reduces the payment and usually increases the total. That is what spreading a cost does. Any comparison ranked by monthly price will therefore tend to pick the more expensive contract, reliably, and the framing is not an accident.
Compare totals. If you take one thing from this page, that is it.
When bundling genuinely wins
It is not always worse, and there are real cases for it.
Cash flow. If £800 upfront is not available, a route that does not require it is better than a cheaper route you cannot take. Paying somewhat more to spread a cost is a legitimate decision, as long as you know that is what you are doing.
Genuinely subsidised deals. They exist, particularly on older models a network wants to clear. The arithmetic finds them; the point is to do the arithmetic rather than assume either way.
Interest-free credit. Handset finance at 0% over the term is not obviously worse than paying cash, if you would otherwise put the cash somewhere it earns.
What does not win is a bundled contract chosen because the monthly figure looked smaller than the total price of a phone. Those are not comparable quantities.
Before either, check the phone you have
The cheapest route is nearly always keeping the phone in your pocket, and the two most common reasons for replacing one — a battery that no longer lasts the day and storage that is permanently full — both have fixes costing a fraction of a replacement.
Repair or replace a phone? covers how to tell the difference.