The quick answer
If you can afford to buy a phone outright, or you're happy keeping your current phone, SIM-only is usually cheaper. Contracts make sense when you want a new phone without paying hundreds up front, or when a network is running a strong promotion.
How to work out the real cost of a contract
Ignore the headline monthly price and calculate the total you'll pay:
Total cost = upfront cost + (monthly price × number of months)
Then compare it with buying the same phone outright and pairing it with a SIM-only plan with similar data:
SIM-only total = phone price + (SIM-only monthly price × same number of months)
Whichever total is lower is your better deal. Do the sums over the same length of time, so a 36-month contract gets compared against 36 months of SIM-only.
When a contract can win
- You don't want a big upfront cost. Spreading the cost of a £800+ phone can be worth a small premium.
- There's a promotion. Free gifts, discounted months or trade-in bonuses can tip the maths.
- You want extras. Some networks include streaming subscriptions or roaming that you'd otherwise pay for.
When SIM-only wins
- Your phone still works well. Keeping it for another year or two is the single biggest saving most people can make.
- You want flexibility. Many SIM-only plans run month to month, so you can switch whenever a better deal appears.
- You buy refurbished or second-hand. Pair a good-condition phone with a cheap SIM and the savings add up fast.
Watch out for
- Annual price rises. Check how much your bill can go up each year. UK networks must now state any rises in pounds and pence when you sign up, so look for that figure.
- Long contracts. 36-month deals can look cheap per month but tie you in for three years.
- End of contract. Once you've paid off your phone, switch to SIM-only or a new deal. Otherwise you may keep paying for a phone you already own.
Ready to compare?
See our current SIM-only deals and phone contract deals.
Last reviewed 2 November 2026. This guide is general information, not financial advice.