Computers & Technology

Outright mobiles cheaper than on contract

Taking up a mobile repayment plan not worth it, says CHOICE

If you add up handset charges, data packs and contract cancellation fees, the typical two-year contract consistently costs more than buying the same phone outright and getting a prepaid plan.

Based on a two year period CHOICE found a new iPhone 6S Plus on contract with lots of calls and 3GB of data costs

$2200-2400 on Vodafone or Telstra, compared with around $1700 if you purchased outright and used a Amaysim/Vaya 3GB prepaid plan on the Optus network.

Further savings can be made if you keep using your 'outdated' smartphone or purchase a cheaper model on the second-hand market.

Keep in mind that, like desktop PCs and tablets, smartphones are reaching a plateau in processing speed, camera quality, storage space and usability. Newer phones do offer an upgrade to Android 6 OS, or faster operation on iOS 9 for iPhones, but neither of them offers ground-breaking new features.

Going prepaid also means you can change your mind without financial penalty if life changes.

If you move overseas, lose a job, gain a baby, you won't be stung by early termination fees. To exit a contract you must pay out the remaining months of your contract including handset fees.

One contract provider does offer flexibility to New Zealand travellers. Vodafone now offer free roaming there if you have a Red or SIM only contract, or $5 per month to roam in several more countries.

A 2015 CHOICE survey found customer service is better among smaller network resellers who offer prepaid and month-to-month postpaid plans. Telstra had the lowest score, but was best for network coverage.

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