The loyalty penalty on your mobile bill: why staying put costs you more

Staying put with the same mobile network feels like the easy option. It is also, for millions of people in the UK, one of the quietest ways to lose money. A survey of 2,000 adults carried out by Opinium for the provider Lebara, reported in October, puts the collective cost of that inertia at around £9bn a year — a headline estimate, but one that matches what the regulator has been saying for years about the loyalty penalty.

What the survey actually found

The pattern it describes will be familiar to anyone who has let a contract roll on. More than half of those questioned — 56% — said they stay faithful to their mobile operator even when it works against them. Around a quarter, 25%, did not know when their current plan ends. Another 11% knew better deals existed somewhere but were not sure where to look.

The reasons given for not moving are strikingly ordinary: habit (29%), simple reluctance to deal with it (28%) and, for 22%, a fear of being stung by hidden charges on the way out. Nearly a third, 31%, had been with the same network for more than five years and 12% had never switched at all. Only 9% strongly felt that loyalty was rewarded, while 45% suspected the big networks keep their best prices for new customers.

Where the money leaks away

The expensive moment is the end of a handset contract. On a typical 24-month deal you pay for the phone and the airtime together. Once the phone is paid off, many tariffs carry on at the same monthly price — you keep paying for a handset you already own. Ofcom's work on bundled handset contracts found that out-of-contract customers in that position were paying, on average, just under £11 a month more than they would on a comparable SIM-only deal, which added up to roughly £182m a year across the group affected.

More recent comparison figures point the same way. Uswitch calculated an average annual saving of £262 in July for someone moving from an ending 24-month handset contract to a SIM-only plan. That is not a theoretical gain: it is the same phone, the same number, a smaller bill.

The protections you already have

Several of the rules designed to stop this are in force and underused. Providers must send you an end-of-contract notification between 10 and 40 days before your minimum term runs out, telling you what you pay now, what you will pay afterwards and what their best available deals are. If you have been out of contract for a while, they must also send you an annual reminder of those best deals. Under commitments agreed with Ofcom, EE, Tesco Mobile and Vodafone cut the monthly price for out-of-contract customers, and Virgin Mobile moved its own on to the equivalent 30-day SIM-only tariff.

Pricing transparency has tightened too. Providers can no longer tie a mid-contract increase to inflation or to a percentage: any rise has to be set out in pounds and pence before you sign. That change has not made bills cheaper by itself, as we explained in our look at why the pounds-and-pence rule can still cost you more, but it does mean you can compare two offers over their full term without guessing.

Switching is a text message

The fear of hidden charges that puts off 22% of people is largely out of date. To move network and keep your number, text PAC to 65075; to leave without keeping it, text STAC to 75075. The code arrives by text within a minute, it is free, and your old provider is not allowed to talk you out of it before sending it. The code is valid for 30 days and you hand it to your new network, which arranges the move. If you are still inside your minimum term you may owe the remainder of the contract, so check the notification first — but once you are out of contract, there is nothing to pay.

A five-minute check

• Find out when your contract ends — it is in your account or on your last bill.
• Work out whether your handset is paid off. If it is, you should be on an airtime-only price.
• Note your monthly spend, your typical data use and the minutes you actually need.
• Compare that against SIM-only deals, including the smaller networks that use the big four's masts.
• If you stay, ring and ask for the price on your end-of-contract notification — retention offers exist.

The same logic applies to anything billed monthly by direct debit. Broadband contracts behave in exactly the same way, and homes still on a copper line have a separate deadline to think about, which we covered in our guide to what the landline switch-off means in practice. And if you have ever wondered whether being a long-standing customer buys you anything at all, our piece on how loyalty schemes really reward customers is a useful companion read.

Frequently asked questions

Will I lose my phone number if I switch network?

No. Texting PAC to 65075 gets you a porting authorisation code that transfers your number to the new provider. The switch usually completes within one working day, and you keep the same number.

How do I know if I am paying for a handset I already own?

Check whether your plan is a bundled handset contract or airtime-only. If the minimum term has ended on a bundled deal and the monthly price has not dropped, you are still paying the handset element.

Can my provider charge me for leaving?

Only if you are still within your minimum term, in which case early termination charges apply. Once the term has ended you can leave at the end of your notice period — usually 30 days — with nothing further to pay.

Sources

• ISPreview UK — New survey claims loyalty to mobile operators is costing UK people £9bn a year
• Ofcom — Companies must tell customers about their best deals
• Uswitch — What to do when your mobile contract's price rises

This article was written with the help of artificial intelligence. Editorial policy