Choosing a mobile phone can make your head spin. There are hundreds of different types of phones and plans available. Then there are the extras like ring tones, games and access to special services.
Special features and extras look great in the ads but they aren't all necessary and they can be expensive. It can be all too easy to rack up large debts. This can have a serious impact on your credit rating. A bad credit rating can make it hard to get a loan for a car or house in the future.
Before you buy a mobile phone, think about why you need one, how you will use it, what your budget is and what you are signing up for.
 |
The bottom line
- Check out several phones and plans before choosing. The best looking features in the ads may not add up to the best value.
- Don't lock you or your children into a phone plan that will break the family budget.
|
Work out what you can afford
First work out what you can afford to pay up-front and each month for your phone. See Budgeting for help doing this. This will help you find the best phone and plan for your needs.
Think about how often you will be using your phone, when you'll use it and how long you will normally spend on your calls. Do you want to use it for text messaging, talking or both?
Types of plans available
There are four types of service agreements: fixed term contracts, monthly plans, pre-paid and rental.
- Fixed term contracts – where you commit to a phone provider for a period of time, usually between 12 and 36 months. You will usually get connection to the network, and in many cases, the use of a handset and a certain number of included calls or text messages per month. You will be required to pay a monthly network access fee which will usually include the purchase of your handset and access to services like voice mail. There are fees applicable if you terminate your plan before the period of the fixed term is complete.
- Monthly plans – instead of signing for a fixed period of time, you can have an account with a provider (with or without purchasing a handset) and be billed month to month. There is no long-term commitment unless you have agreed to purchase a new handset with the plan and then you will need to stay with the provider until the handset payment is complete. There are no exit fees or charges to pay. Many providers are now offering ‘capped monthly plans’ which offer value for people who use their phone a lot.
- Pre-paid – gives you control over the amount you spend. You can buy a pre-paid SIM card and put it into your own handset or buy a handset with a pre-paid card already in it. Pre-paid call charges can be higher than those on post-paid plans, so make sure you check out the call charges before buying a pre-paid. If you buy the handset with a pre-paid card in it, it may be ‘locked’ to the provider’s network. An ‘unlocking’ fee may apply to use another provider’s pre-paid card. Check these details with providers.
- Rental – if you only need the phone for a specified period then this might be the option for you. Renting or leasing allows you to use a mobile phone without buying the handset and being tied to a long contract. At the end of the lease you simply return the handset or continue.
Call plans
Plans contain the different call rates and fees for using your phone. The call rates vary across the different plans. When comparing plans it's important to consider:
- Call charges – how are they calculated - per second, per block of time or are they capped under the new capped deals? Don't forget there are different charges for talking, texting, and sending or receiving photos and videos.
- Flag fall - is there a flag fall charge for each connection in addition to the call costs?
- Special offers - are there any cheaper calls off-peak, to friends with the same network or for SMS? Are there free services such as voice mail? Can you restrict the phone to only being able to call certain numbers? The offer '$0 up-front' means that the cost of the handset is absorbed into the overall contract price. This does not mean that it is free. Make sure all of the 'free' accessories are ones you will use as they will also be absorbed into the overall contract price.
- Coverage - where do you need to use your phone? It pays to compare the coverage of different providers.
- Additional features - what are they and can you afford to use them?
There are some internet-based plan comparison services which can help you to see which plan is best for you. See More information.
Limited services
A new industry code has been developed to protect mobile phone users from getting into financial difficulty. The code requires all phone providers to conduct mandatory credit checks and offer customers the option of a limited service plan. This may be of particular benefit for parents buying phones for their children. Explore these options with providers to find out what is available for you.
Phone features
Make sure you really know what you need. Features that you should definitely take into account are battery capacity and ease of use. Do you just need a basic handset or a more sophisticated one, like one that has video and photo options?
Flexibility
Do you want flexibility? Are you happy to be locked into a 36 month contract? There are many different options for paying for handsets (up-front, part of your contract) and different plans (pre-paid or post-paid) which all have different terms and conditions - including penalties for changing networks and plans.
Insurance
You may want to insure your phone to protect you if you lose it or have it stolen. Some mobile phone companies offer insurance. Make sure you read the conditions and any exemptions before taking out any policy.
For more information about insurance and how to find the best product for you, see Insurance.
Don't sign anything you don't understand
If you choose a post-paid plan, you will need to sign a contract. Mobile phone companies are required to provide you with a clear, easy-to-read written summary of the contract. Look at the terms and conditions, compare the rates, check the fine print and ask for more details if necessary.
Do not sign anything you don't understand. Remember, if you sign the contract, you are responsible for the bills. If you are not completely happy to do this, choose a pre-paid option instead.
Lost handsets
If you lose or have your phone stolen, advise the mobile phone company and the police immediately. Your number can be barred to save you the cost of someone else using your phone.
When things go wrong
You should first contact the retailer or network provider to try and sort it out. Make sure you have copies of your receipt and contract. If you have no luck, ask to speak to a supervisor. If the problem is still unresolved, you can contact the Telecommunications Industry Ombudsman or the government department that looks after consumer affairs in your state or territory. See More information.
More information
There's a lot more that you can find out about buying a mobile phone. See More information.