More and more of us are choosing to buy our phone upfront and use a cheap SIM-only deal, rather than taking out a contract that takes years to pay off.
But what if your apparent thriftiness is actually costing you?
That’s what money blogger Andy Webb discovered when he looked up O2’s tariffs for the iPhone 6s.
When he checked the price against Apple’s, he realised he’d be spending £90 MORE if he bought it upfront through O2.
He said: “The reason you normally pay more for a phone when on contract is you are borrowing money to pay for it. Essentially you’re charged interest.
“But here, you’re buying upfront and therefore not paying off the phone each month. So where do they get the extra £90?”
Even pricier than the Apple Shop
Andy found a deal on O2 which allowed him to pay for a 16GB iPhone 6s upfront . It promised him: “Paying for your device upfront means that you'll have a lower monthly bill.”
In other words, if he coughed up £629.99 for the phone, he could pay just £17.50 a month for the lowest data allowance, 1GB.
Sounds good? Well, maybe, until you check the Apple Shop.
You can buy the same iPhone 6s direct for £539 . That’s £90.99 cheaper. And then you can match it with whatever SIM-only deal you want.
An O2 spokesman confirmed a customer may pay more for a device outright at point of sale than the RRP direct from the device manufacturer.
He said it would however benefit customers using O2 Refresh , a scheme where you can trade up your phone model.
O2 Refresh explained
This deal separates the cost of the phone from your other contract payments. It allows customers to pay some cash upfront for their glossy new phone and pay back the rest in installments. As soon as they pay off the phone, they can leave.
Yes, you'll pay more than if you buy your phone upfront from the Apple Store. But if you have half of that money saved up, it could be a way to still get the phone and avoid a long and expensive contract.
Of course, there are other ways you can get credit that helps you spread the cost, such as using a 0% purchase card.
Ernest Doku, telecoms specialist at uSwitch , said: “In theory, O2 Refresh sounds good - you don’t keep paying for a handset you’ve already paid off, plus you can upgrade to a better smartphone in the middle of your 24-month contract.
“Mobile users who pay monthly with the handset cost ‘baked' into their tariff – and forget to compare and switch when their contract is up for renewal – start paying for the very same handset all over again.
“But there is a flip side to O2 Refresh. It’s often not as cheap as buying a handset upfront and then taking out a SIM-only contract.
“The popularity of buying a phone outright – and ability to see a handset's full cost – really lifts the curtain on some poorer deals from a contract pricing perspective.
“Of course, not everyone can afford to buy an iPhone directly from the Apple Store, even if it is £90 cheaper over the duration of a contract, which might explain why pay monthly contracts aren't dead yet.
"But pairing a brand new phone with a great value SIM card is a clever way to keep costs down overall - provided you can swallow that one-off phone cost."
The Mirror Money view? There are loads of smartphones on the market. Find yourself a cheaper deal for now and squirrel away your savings - so next time you can truly buy that iPhone upfront.