Don’t want to be tied to a contract? You CAN cut bills on pay as you go
IF YOU are exasperated with being tied into a lengthy contract for a product or service, do not despair. There is a way to live without being tethered to your provider.
It is called ‘pay as you go’, an option which is finding favour across all age groups.
Emma Mumford, a money-saving blogger known as The Coupon Queen, has spotted a resurgence of interest in ‘pay as you go’.
This is where customers pay a monthly amount upfront for a product or service but are able to escape at any time without penalty.
She says: ‘More people are starting to think about how their lifestyle could alter in the short term. Maybe they are planning on changing jobs or moving house. For many of these people, pay as you go is the answer.’
She adds: ‘It gives you the freedom to try out loads of things with no strings attached. You can join a gym, try out a car club and run a mobile without signing up to a long contract.
‘You have little to lose and could find it provides the control in your financial life that you have been craving.’
Here, The Mail on Sunday charts the rise of the modern pay-as-you-go lifestyle.
MOBILE PHONE
THE mobile is the product that most defines pay as you go. In simple terms, you load cash on to your phone and use it until the money runs out. Mobile providers offer two options for ‘prepay’ customers.
You can either buy a bundle of minutes, texts and data for a month or just top up credit on the phone’s SIM card.
There are also so-called SIM-only deals. These differ from pay as you go in that you do have a contract but the options are more flexible, including rolling contracts as short as a month.
Peter Earl, head of utilities at comparison website comparethemarket, says: ‘SIM contracts start from as little as £3.95 for a one-month rolling deal. They are proving popular. Last month, we saw a 49 per cent increase in clicks to SIM-only options.’
He adds: ‘These deals can be useful if you have finished paying for your current phone contract and want to keep your phone, but have the freedom to change the tariff you are on.
‘Just make sure you check which SIM your phone is compatible with, as some phones take specific SIM types and can be locked to a certain network.’
Competitive deals include those from TPO Mobile, Plusnet, giffgaff and TalkTalk.
BROADBAND
TRADITIONAL pay-as-you-go broadband, where internet usage is paid for by the megabyte, has died out.
Tom Gregan, of comparison website broadbandchoices, says: ‘The closest option is mobile broadband, where you buy a dongle or mobile wi-fi device, add credit to your account, then use the credit to buy a data pack.
‘The problem is that pay-as-you-go mobile broadband is expensive, with £10 for a 1GB data pack not unusual. This will let you stream just one or two hours of video.’
There is a more flexible alternative for the commitment-phobe via a 30day broadband contract.
TenTel offers rolling one-month broadband from £18.99 per month, plus £35 set-up costs, which can be cancelled at any time.
Sky’s Now TV offers the same with unlimited downloads and a TV pass thrown in for £29.99 per month and a £44 set-up cost.
TELEVISION
SUBSCRIBERS to television packages are often disgruntled with paying month in, month out for a menu of programmes, most of which they never watch.
However, there are more flexible options that do not tie you in and offer access to dozens of popular channels
and radio stations. The best known is Freeview, which has 70 channels and comes as standard in many modern televisions or as a box (from £20) that can be plugged into older sets.
Similarly, Freesat (from £85 for a standard box) has 200 channels, although you need a satellite dish.
Growing in popularity are streaming services, such as Netflix. For a monthly subscription (starting at £5.99), viewers can dip into hundreds of programmes and films but cancel the service at any time without penalty.
Sky’s Now TV is similar but priced at £6.99 a month for its ‘Entertainment Pass’ or £9.99 for the ‘Movie Pass’.
Jennifer Elworthy, of Freesat, says: ‘A combination of inflation and stagnant wage growth is making TV subscriptions unaffordable for many households. The average payTV subscriber spends more than £500 a year on their contract and with some Sky and Virgin packages, it will be closer to £1,000. This is a huge cost.’
Strict minimum-term contracts can make people feel trapped. This has caused a rise in consumers switching to free-to-air TV, which still broadcasts the vast majority of the most popular shows.
GYM
GYMS like to tie in customers with expensive annual contracts – galling for those whose commitment to exercise wanes as New Year becomes a distant memory.
But many providers now offer a monthly rolling contract option. Though this works out more costly over 12 months, it means you can cancel when you want.
For example, Virgin Active Wearside Club, in Sunderland, costs £54 a month for those who sign up for a year, while the flexible option costs £67 a month.
An alternative is to buy a package of classes through an app such as ClassPass. For a minimum £35 a month for three classes, there is a wide choice – everything from boot camps and dance to pilates and yoga. The deal is on a rolling monthly contract and can be easily cancelled. But if you miss a class without cancelling in advance, you incur a penalty. PayasUgym is another flexible option. Simply tap in your postcode on the website and it comes up with local deals on anything from single day to monthly passes at affordable prices. This appeals to Matt Bowling. The 29-year-old works for tour company Golden Eagle Luxury Trains, so is often travelling for work and unable to commit to paying every month for a gym. Matt, from Altrincham, Greater Manchester, says: ‘With PayasUgym, you may not receive all the benefits of full membership, but you can try out new venues which I love to do.’ He recently bought ten sessions at his local gym. Given he purchased the package via cashback website Topcashback, it means his individual gym visits will cost less than £3.