Keen for a new phone but put off by the price tag? Here are some tips and tricks to make this particular purchase a bit gentler on your bank account.
They’re cool. They’re cutting edge. They look great. And with Apple, Google and Samsung all announcing their new offerings, a new phone is likely to be on lots of wishlists.
But it’s no surprise to say they don’t come cheap. The iPhone X for example, is priced at £999 for the 64GB version – but goes up to an even more eye-watering £1,149 for the 256GB version, making it the most expensive handset Apple has ever made.
So does this mean you won’t be able to get your hands on one unless you dig your savings into a black hole or tie yourself into a lengthy phone contract?
Not necessarily. It’s never going to be cheap, but there are ways you can make it more affordable.
Avoid the temptation to jump straight into a monthly phone contract
If you’re looking to get a new handset as part of your monthly phone contract, you may be able to save a small fortune by going about this slightly differently. There are two alternative routes to this…
1 - Buy your handset upfront (if you’re lucky)
If you’re lucky enough to afford a new handset up front, and get the airtime separately, this will often end up much cheaper than if you spread the cost of the handset over a phone contract. This is because you can shop around for the cheapest handset price and you won’t have to pay any extra to spread the cost.
In contrast, when you get a new handset bundled in with your phone plan, you don’t tend to find out the final price you’re paying for the handset. You also won’t know how much of your bill goes towards paying off the phone itself and how much goes towards paying to spread the cost of the phone. Technically this isn’t a loan, so networks don’t have to declare any ‘interest’ they’re charging you, but most of the time you’ll be paying a premium to spread out the handset cost.
2 - Arrange the contract yourself
If you still want to spread the cost of the phone but avoid the expense of a phone contract, one option is to ‘unbundle’ your contract. Unbundling is when you buy your airtime, handset and handset loan separately.
While taking out a loan for your phone may feel less than ideal, and it’s certainly not a free way to borrow, you may still find it’s a lot cheaper than getting a handset as part of a package deal. Websites such as Unshackled specialise in unbundling.
Citizen’s Advice research showed customers could be losing out on up to £38 a month if they don’t renew their phone contract as soon as it’s due. This is down to the fact that you if you don’t renew, and a handset cost is included in your package, you’ll still end up paying the same monthly fee even after you’ve paid off the value of the handset.
Consider buying an unwanted upgrade
Given that smart phones don’t date (or break) in the same way they used to (anyone else remember the 00s?), they tend to last for much longer. Before you know it you’re at the end of a 24 month contract and you’re still perfectly happy with the phone you have. This mean there are a ton of people out there putting top range, unused phones on the market in a bid to make some money from their unwanted upgrade.
Online marketplaces like eBay and Amazon are usually the best places to search for these deals. However, it goes without saying that you should beware. Always read the item description carefully and only buy from sellers who have a positive history.
Use a 0% purchase credit card
Used wisely, 0% purchase credit cards can be a great way to borrow money for cheap – or free if you’re careful. They don’t charge interest on your balance, usually for an introductory period. This can give you a way of making your new phone more affordable, because you can spread the cost without paying any interest.
As you might expect, 0% purchase credit cards come with lots of conditions. In particular, you’ll need to make at least the minimum payment on your bill each month. Anything still outstanding when the interest-free period ends will also start collecting interest, so it’s best to try and pay it all off before this happens.
You can find out if you’re eligible for a 0% purchase credit card on your ClearScore offers page.
Consider a pre-loved phone
Pre-loved phones, also known as ‘seller refurbished’ phones, are used phones that have been restored to factory defaults. They can range from mint condition to handsets with visible wear and tear, and this is usually reflected in the price. Typically, they’ll also have a warranty.
Bonus tip: How not to buy the new iPhone
In the US, the iPhone X costs $999 (£761) for the 64GB version and $1,149 (£875) for the 256GB version*. By comparison, buying the phone in the UK costs £999 for the 64GB version and £1,149 for the 256GB version.
With this in mind there was quite a buzz on social media as people discussed the idea it could actually be cheaper to fly to the US to pick up the phone, and you’d even get a free holiday thrown in. But, unfortunately, if this sounds too good to be true, it’s because it is.
Firstly, US prices are exclusive of sales tax, which varies from state to state. In NYC, it’s 8.75%, which means the true cost of the iPhone X is $1086 or $1,249 for the more expensive version.
Secondly, according to HMRC rules, you have to declare anything worth more than £390 which you bring from outside the EU. You also have to pay VAT and import duty on it.
As it happens, phones are exempt from import duty. However, you’ll still have to pay 20% VAT. In other words, you’ll have travelled several thousand miles across six time zones, only to save about £40. Maybe not such a thrifty solution after all.
*Based on exchange rate 1 GBP = 1.31215 USD. Listed on xe.com on 06/11/17.