Cost of living: How to save money on your phone bill

·8 min read
Everything you need to phone about your phone bill, including how to save money and what happens if you don't pay on time. (Getty Images)
Everything you need to phone about your phone bill, including how to save money and what happens if you don't pay on time. (Getty Images)

As the cost-of-living crisis continues to bite, consumers are looking to save money wherever they can, and phone bills are often an area where savings can be made.

It's common for mobile networks to increase their bills annually with inflation, but sometimes they hike their prices even further.

For example, in February 2022 Virgin Media increased it's bills by 11.7%, despite the RPI rate of inflation being 7.8%

Most contracts do include an annual bill increase in the terms and conditions, but they must give customers at least one month's notice before doing so and offer the right to terminate the contract early without a penalty.

We look at the ways you san save on your mobile phone and landline bills and what to do if you can't pay your bill on time.

Tips for saving on mobile phone bills

1. Check to see if your contract has ended

Phone contracts normally last 12, 18 or 24 months before they automatically renew.

If your initial contract has finished and you feel that you're paying too much, leaving for a better deal could save you a lot of money in future, according to Ofcom.

Contracts that are not 'sim-only' include the cost of the new phone. If you've reached the end of a contract and are happy with your handset, you should switch to a sim-only deal to avoid paying far more than you need to.

2. Browse deals

Sifting through deals on comparison websites such as Money Supermarket, Uswitch and Mobile Phones Direct lets you look through contracts, SIM only plans and mobile phones to find one that's within your price range.

MoneySavingExpert.com has a useful guide for finding a new contract on a budget.

3. Ask your current provider if they can price match another company

Ofcom says that if you're out-of-contract, there's a good chance that you're paying too much.

A spokesperson for the regulator said: "By spending as little as five minutes on the phone to your network, you could save hundreds of pounds."

It has a list of questions that you can ask your provider to try and get a better deal.

4. Make the most of Wi-Fi

One of the most common ways people end up paying extra charges on their bill is by using going above their data allowance, with apps like YouTube, Facebook, Skype and TikTok using a lot of data.

An easy way of avoiding going above your allowance is by taking advantage of Wi-Fi at home and in public spaces.

If you find that you don't normally use all your allowance, you could try and find a new contract with less data which costs less each month.

5. Get a cap for your bill

You can ask your network for a cap so that you can't go over the calls, texts and data agreed in your contract.

However, this doesn't cover other services charged by your provider which aren't aren't mobile services, such as fees for paper bills or late payment fees.

6. Consider a pay as you go SIM

Martin Lewis' website MoneySavingExpert.com recommends a pay as you go sim if you don't use calls, texts and data much over the course of a year.

However, they are more expensive for "medium to heavy" users.

7. Double check your bill is correct

Companies do occasionally make mistakes regarding charges, so it's important to double check every bill.

If you do spot an error, you should contact your network immediately and if it isn't resolved within eight weeks, you can contact an ombudsman to investigate it.

The National Debt Helpline says that if you spot a mistake on your bill from a third party company, you should contact them directly. For instance, if you're charged the wrong amount for a TV competition you entered.

8. Trade in your old phone

Many providers have schemes which allow you to upgrade early or cover the cost of your next bill if you trade in an old device, including O2, Virgin Media, EE, and Three.

Ofcom says that it's best to let your provider know if you're struggling to pay a bill. (Getty Images)
Ofcom says that it's best to let your provider know if you're struggling to pay a bill. (Getty Images)

What does a phone bill show?

If you have a mobile phone contract then you'll get monthly bill which shows three things:

1. Your standard monthly charge agreed when you signed up.

2. Additional charges from your provider, such as if you went above your data allowance.

3. Part charges, like the upfront cost of delivering your device or charges from third party apps.

Bills can be sent in the post or viewed online if you have an account and most providers also have a number you can text to see your remaining allowance or extra charges.

Do phone bills count as utility bills?

Officially, landline bills issued by telephone companies count as utility bills, but mobile phone bills don't.

Gov.uk states that mobile phone invoices can't be used as proof of identity as it's possible to send them to different addresses, unlike traditional telephone bills.

It recommends using utility bills like gas, electric, and landline instead.

What happens if you don’t pay a phone bill on time?

If you miss a payment for your mobile phone bill, your account will likely go into arrears.

This means that your phone service could be disconnected and you won't be able to receive calls and texts until the outstanding debt is paid.

EE has warned that it could also add a termination fee to your account and pass on customer's details to a debt collection agency, who can add their own fees for recovering the debt.

However, Ofcom says that it's best to let your provider know that you're going to miss a payment before it gets to this stage.

That way they might be able to offer you alternatives, such as being able to pay the debt over time, changing the billing date or switching payment methods.

Will your phone bill affect your credit score?

Whether you use a credit or a debit card can also affect what happens after a missed payment.

James Jones, head of consumer affairs at Experian said: “Taking out a new mobile phone contract can reduce your credit score for a little while, like any new credit agreement. Monthly phone contracts are routinely included in credit reports and, if regularly paid on time, can help you build a good credit score."

However, he also said that "it’s important to make payments on time because a missed payment could negatively impact your score".

"Before applying for any new financial account, it’s worthwhile checking your credit report and score first to make sure there aren’t any issues.”

Can you claim the cost of your phone bill on tax?

It's possible to claim expenses on your mobile phone bill in certain circumstances. (Getty Images)
It's possible to claim expenses on your mobile phone bill in certain circumstances. (Getty Images)

If you're self-employed, you're allowed to claim expenses on your mobile phone, but only for the business costs.

For example, if you your mobile phone bill for the year was £300, and you spent £230 on personal use and £70 on business use, you can only claim back £70 worth of business expenses.

On the other hand, if you're the director of a limited company, you can claim expenses on all work phone bills, as long as only one mobile was given to each employee.

HMRC considers the full cost of bills as tax allowable, given that the contact is held in the company's name and business bank account.

If you don't meet the criteria for tax allowances, there are a number of other methods experts recommend for reducing your bill.

There are ways of saving on your phone bill during the cost-of-living crisis. (Getty Images)
There are ways of saving on your phone bill during the cost-of-living crisis. (Getty Images)

What about landlines?

There are also ways of saving on your home phone. (Getty Images)
There are also ways of saving on your home phone. (Getty Images)

Home phones bills work slightly differently from mobiles as they're usually tied up in broadband packages.

But, there are still several ways of saving money on your landline.

1. Check to see if your contact has ended.

Just like with your mobile, if you're out of contract you can leave your current contract for a better deal without paying a penalty.

2. Do some research to find the best deals.

Using comparison websites like BroadbandDeals.co.uk and Uswitch allows you to browse through hundreds of broadband offers to see if you can find a better one.

3. Ask your current provider if they can price match another company.

Money Saving Expert's Martin Lewis recommends haggling in order to get a better deal from your existing provider.

For example, you could also ask them what offers they're giving to new customers.

4. See if you're eligible for a discount.

Ofcom claims that 4.2 million people on Universal Credit could halve their bills by taking advantage of special discounted packages available.

BT, Virgin Media, Community Fibre, G.Network, Hyperoptic, and KCOM all have discounts for people in receipt of certain benefit.

5. Consider ditching your landline if you don't use it.

According to a survey from Uswitch, 40% of Brits no longer use their landline.

If you're paying for landline that you don't use, you could speak to your provider about getting rid of it.

If you don't want to lose your broadband, several providers offer options for taking broadband without a phone, including Virgin Media, EE and BT.

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