I hate paying out anything on a regular contract. I hate borrowing money, and I hate incurring interest of any sort. All my credit cards are paid off each month by direct debit so that, if there is any error, it is the error of the credit card company.
So, as you can imagine, I always paid cash for my mobile phones and pay as I go.
But this time around, I decided to look into the figures. As I have been with Virgin from the beginning, I decided to check them out and as my previous phone was the HTC Hero, and I didn’t like the iPhone, I decided on the faster HTC Desire..
First of all, a 24 month contract cost £840 (payable at £35 a month for two years). For this I get 1,000 free minutes (£200 at PAYG rate), 3,000 free texts (£300 at PAYG rates) and one Gigabyte of Internet (£9 at PAYG rates).
However, I wanted to pay £25 a month and found I could pay £149.99 up front and get the monthly tariff lowered to £25 a month, but my free calls came down to 600 a month, and everything else stayed the same. This was OK with me as there is no way I can make 600 calls a month and over the months have never even reached half way, and I use it all the time! 3,000 texts is just ridiculous! And a gigabyte of Internet is more than generous. Virgin had evidently made an error with the up-front payment as they have since raised it to £199.99.
Looking at this another way. The phone was £460 at Amazon when it came out – and when I got mine. Although it is under £400 now. I am paying 24 x £25 plus the one off payment of £149.99. So over two years I will have paid out £749.99. If we deduct the Amazon price for the new phone from this figure we are left with £289.99, or £12.08 a month.
So, in real terms, in buying under contract, I am saving 2.5% interest on my £460 – reducing with each month, but still a saving. (Tesco Bank pay 2.5%)
And, I am getting 600 minutes to any cellphone or land-line, 3,000 texts, and a Gigabyte of Internet, all for £12.08 a month.
Or around 20 minutes talk, 100 texts and 33 Megabytes of Internet a day.
It was only after I worked all this out that I decided to bite the bullet and take out the contract.