SIM-only plans are everything to rave about nowadays. They are a smart business model that plenty of consumers are finding lots of advantages. A simple solution to a credit history holding you back, or a genius way to manage those all-important monthly finances, there are plenty of reasons why SIM-only is the way to go. This guide explains the differences between SIM-only plans and the contract mobile setup, along with the main reasons to consider moving to SIM-only.
What is SIM-Only?
SIM-only is when you have just a SIM card for your phone, and that is all you pay for. These can be great for short-term commitments, helping teens learn how to manage their finances, and for lots of other reasons too. There is no credit agreement to speak of, and they require a certain financial commitment to receive all of the attached usage benefits like data allowances, calls, and texts.
What is a SIM-Only Plan?
A SIM-only plan is a SIM card you purchase on a SIM-only basis. However, unlike some singular SIM cards, these are bought on an agreed term, for example12-month or 24-month, and you agree to pay X amount per month to keep the SIM active and fulfill your end of the deal. If you miss a payment, you can start it right back up again once the funds have cleared.
The Main Differences Between a Contract Phone and SIM-Only Plan
There are some big differences between a contract phone plan and a SIM-only one. The main one worth noting is that if you take out a phone contract, you get a mobile phone. If you take out a SIM-only contract or plan, no phone comes with it. Instead, it is a SIM card product package with a selected amount of data, etc., that is highly appealing to a lot of people. There is often access to more data for less money, for instance, without the financial commitment of a brand new handset to juggle too.
What Is A Phone Contract?
A phone contract is a credit agreement that you sign and agree to pay for over a stipulated period. This could be for 12 months, but is typically longer, for instance, 24 months or even 36. With this plan, you receive a new handset, and a bundle of data, minutes, and texts to go along with it. These are often expensive contracts because you are also paying a premium for the cost of a new mobile phone as well as all the perks that come along with it.
The Main Differences Between a Pay-As-You-Go Deal and a SIM-Only Plan
It’s also worth discussing the differences between a SIM-only and a pay-as-you-go SIM because there is a lot more confusion between the two things. They are different products, to answer that first burning question. The big distinction to understand is that with pay-as-you-go, there is an assumption that you top up every month with a certain amount of credit to activate all of the texts or calls. Normally, things like data carry additional charges. With SIM-only, you pay a rolling fee every month that is billed automatically without having to top up and it comes with the allowances all rolled into the package.
The Reasons to Try Out SIM-Only
So, it all sounds appealing this far right? That’s because it is. There have to be reasons behind SIM-only thriving in the market, and these are all too obvious to look straight through without at least exploring them to some degree. So, what is the magic formula that is causing all this hype and interest?
1. Cheaper Upfront Cost
The first big perk you get when you opt for SIM-only is a cheaper upfront cost. There are no handset payments, no added interest to a credit contract, zero hidden charges, and a small cost of purchase. That’s it. This is great for a lot of people who need access to a phone more quickly and don’t want the hassle that sometimes comes along with pay-as-you-go. It takes away the necessity for a big lump sum payment to secure the handset and means you are left with a model that works for your budget.
2. Easier Financial Management
So, aside from the initial setup benefits in terms of cost, there are ongoing ones to think about as well. A phone contract can cost anything from £30 to over £100 every single month. If you want the big perks, you have to fork out more money, and there is no way to guarantee that the company you’ve taken a contract out with won’t slap on extra fees, implement interest charges, or even change the price of your deal halfway through your contract.
These things happen a lot, and they are incredibly hard to plan for. So, you may think you’ve found a good deal, but you have no way of knowing whether that good deal will last for the duration you’ve signed up for. If something did change, even an extra 10% cost increase a month is difficult to manage when it comes to handling a strict budget and general household commitments. SIM-only plans take away all of that stress by operating in the majority with fixed-rate terms that you can rely on every month to be the same.
3. Predictability
What comes along as a natural byproduct of easier financial management? Predictability! Knowing where your money is going to be and what service you are going to get every month is a blessing. There is value in this, and it’s always worth investing in reliability. It promotes better well-being, supports a sense of security, and is a simple way to impact positive change in your daily life. Predictability is a big part of forming a great routine, and when you feel in control of the iterations like how much you pay for your phone and whether or not you’re going to make the payment, life becomes so much easier.
4. No Major Commitments
Contract phones require you to sign up for a long time and always pay the required amount of money every month with no exceptions. They can be very harmful to your credit file if you mismanage the payments, and that is why something that is nowhere near as big of a commitment looks like the more attractive route of access for so many people. Major financial commitments can be debilitating if you go into them naively, and there are plenty of reasons why they are not as straightforward as they seem on paper. Save yourself the hassle of defaults and high ongoing payments and opt for a no strings attached SIM-only product instead.
5. You Can Still Get Add-Ons
If you are feeling worried about missing out on data or big perks, then allow this to put your mind at rest. There is no reason at all that you cannot still access all the great add-ons that come with contract phones. It’s all about which SIM you pick and how much you want to pay. If you want things like access to TV subscriptions, there will obviously be a higher cost; however, some SIM-only plans have started offering this on a complimentary basis too to sweeten the deal. There are always great deals out there, it’s just about putting in the time to research and find the one that suits you the most. For instance, lots of SIM-only plans come with unlimited data now, something that contract phones charge a ridiculous rate for.
6. Better For Poor Credit
Lots of people are held back by their poor credit history. If you have ever defaulted on payments in the past or let it go to court etc., there will be a slight difficulty (sometimes more) when it comes to securing credit in the future. For anyone in this position, a phone contract may feel like a bit of a pipe dream. That is why SIM-only plans are amazing because they are so much easier to secure and are nowhere near as harmful to your credit file as missing a phone payment on a big contract. For anyone with poor credit looking to rebuild, these are a great asset to have on your team and you will never look back. It opens up so many more doors, allows you to stay out of debt, and to generally manage your incomings and outgoings more successfully too.
SIM-only plans are there to provide a way to combat that big gap in the phone industry market caused by contract deals. For people who are not able to access a traditional contract, it no longer has to be a big point of stress. Options like this mean anyone can have the best deals and allowances every single month with the bonus of increased financial autonomy. There are so many perks, and this all adds up to why you should try out a SIM-only plan for your next mobile phone purchase.