6 min read

SIM-only plans

Hannah Patnick
9 June 2017

What are the ins and outs of SIM-only plans? And why would you choose one over another kind of mobile phone deal?

While getting a shiny new phone on contract can be very tempting, a SIM-only plan might be a better option. SIM-only plans are usually cheaper than full-blown mobile contracts and they’re more flexible. We're going to have a look at how SIM-only plans work and discuss some of the pitfalls you should avoid when getting one.

How does a SIM-only plan work?

SIM-only plans only include airtime. You’ll need to get a handset separately. There are two types of SIM-only plans: pay monthly and pay as you go (PAYG).

Pay monthly

A pay monthly sim gives you a monthly allowance of calls, texts and data for a fixed price. Most phone networks have a range of different plans, so you can choose the bundle that best suits your usage and your budget.

Pay monthly plans can be fixed (typically for 12 months) or on a 30-day rolling basis, which means the bundle renews automatically every month. 12-month plans are usually cheaper, but you may be penalised if you decide to cancel before the term is up.

Pay as you go (PAYG)

With a pay as you go plan, you top up your credit balance and use it to pay for the calls, texts and data you actually use. Once your credit runs out, you’ll be unable to use your phone to call, text or go online unless you top up again.

Depending on your usage, PAYG can work out much cheaper or a lot more expensive than a pay monthly plan. However, some networks regularly run promotions that allow you to earn free bundles of minutes, texts or data if you top up a certain amount or during a certain period.

Check your credit score and report for free with ClearScore

Why go SIM-only?

With a SIM-only deal, the cost of your phone and the cost of your airtime are completely separate. This usually works out much cheaper than taking out a contract phone.

SIM-only plans also have other advantages:

They’re more flexible than phone contracts

You don’t have to commit to a 12 or 24-month contract when you buy a SIM-only plan. This is great if you’re unsure of your usage and want to experiment with different plans before committing to a needlessly expensive phone contract.

They’re easier to obtain if you’ve had problems passing a credit check in the past

PAYG and rolling monthly plans don’t usually require a credit check. And while some networks do carry out a credit check when you apply for a 12-month plan, they’re usually more lenient than they are when your plan includes a handset, because their risk is much lower.

Mobile phones and credit scores
Signing up for a 12-month SIM-only plan can help you improve your credit score.

In a way, SIM-only plans are a type of borrowing. Your network gives you a bundle of texts, calls and data each month; and you commit to paying for it in full when you receive your monthly bill. By always paying your bill on time, you’ll regularly add positive information to your credit report, which can have a positive effect on your overall score.

Of course, the flipside is that missing payments can have a negative effect on your credit score. If you commit to a 12 month deal, make sure you’ll be able to meet all your payments.

What happens when a 12-month SIM-only plan ends?

When a 12-month plan ends, it usually converts to a 30-day rolling plan. However, you can also renew for a further 12-months, upgrade, switch to PAYG or - if your phone is unlocked - switch network provider.

Helpful hint
Some networks allow you to upgrade even if you’re still in the middle of your current 12-month plan. Of course, the monthly cost of your plan will also increase, so do make sure you actually need a larger bundle before committing.

30-day plans usually renew automatically every month unless you give notice to cancel. If you do give notice, you’ll be switched to PAYG as soon as your plan expires.

What if I want to cancel early?

If you’re on PAYG, you’re free to switch to another network at any time as long as your phone is unlocked. To cancel the SIM, simply stop using it. The network provider will disconnect it automatically after six months.

In the same way, cancelling a 30-day rolling contract is as easy as giving notice and waiting for the term to expire.

The situation is slightly more complicated if you want to cancel a 12-month plan. Different networks have different procedures, so do check beforehand. However, broadly speaking, you’ll need to give advance notice - usually 30 days.

You’ll also have to pay a penalty. As a rule of thumb, you’ll need to pay for what’s left of your term. If you’re two months into a 12-month plan that costs £10 a month, for instance, the penalty would be £100.

Cancellation rights
If you purchased your SIM-only plan online or by phone, you can cancel it within 14 days free of charge. You also have a right to cancel if your network provider raises the cost of your plan.

In a nutshell:
  • SIM-only plans only cover your airtime. They don’t include a handset. There are two main types: pay monthly plans; and pay as you go plans.

  • SIM-only plans are usually much cheaper and more flexible than mobile contracts. Typically, networks are also much more lenient when it comes to carrying out credit checks.

  • You’re solely responsible for getting a working mobile phone and repairing or replacing it if necessary.

  • You can cancel at any time, but you’ll usually incur a penalty if you’re on a 12-month plan.

by Hannah Patnick

In her previous life Hannah was a consumer journalist making primetime television shows. Now she's ClearScore's Content Producer. Amongst her many talents, Hannah is famed for her excellent tea-making skills.

ClearScore exists to make your finances simple.
We offer a free service where you can handle everything to do with credit in one place. In your ClearScore account, you can see your credit score and the full details of your credit report. Your credit cards, mortgages, mobile phone contracts, loans, overdrafts and utilities all on the record. Our goal is to make ClearScore as simple, calm and straightforward as possible. Money is stressful enough.