Don't hang around: cut mobile bills

Phone companies are vying for your custom, writes Sam Dunn, but which ones offer the cheapest calls for you?

Buying a handset or switching your mobile phone deal is not a challenge for the faint-hearted. Even the savviest consumers can have trouble untangling the knot of off-peak tariffs, text message bundles, picture message bolt-ons, handset and insurance deals on offer.

Buying a handset or switching your mobile phone deal is not a challenge for the faint-hearted. Even the savviest consumers can have trouble untangling the knot of off-peak tariffs, text message bundles, picture message bolt-ons, handset and insurance deals on offer.

Throw in a slew of special promotions and flash new handsets boasting zoom cameras, and you'll be hard pressed to work out whether you're saving money or simply paying for gimmickry.

Since most of us now own a mobile, phone companies are fighting to lure customers from rival networks. Only two weeks ago, 3 launched the first videophone pre-pay deal, likely to make the market even hotter.

"It's very competitive out there, and you must look at your deal every year," says Jonathan Hook, managing director of UK retail for the high-street chain The Carphone Warehouse. He estimates that nearly a third of people in the UK now change their contract after 12 months, and expects this figure to mushroom. "Most phone customers are more sophisticated than they were five years ago; they are experienced users," he adds.

You might think it would be easy to get left behind amid this flood of improving offers. But many of us are still signed up to good contract deals offered in the late 1990s, when the UK found itself in the white heat of mobile phone technology.

For example, in 1999 an Orange Everyday 50 plan cost £15 a month for 50 free off-peak minutes a day. Mobile users who still have one of these contracts get around 1,500 free minutes a month - a great deal for a very heavy user. Today, the best deal Orange can come up with costs £20 a month for 1,000 minutes.

So, unless you compare deals carefully before switching, you could lose out by moving to a new contract. To avoid this pitfall, you need to think about how you use your mobile.

As a rule, if your bill comes to more than £20 a month, you'll find it cheaper to be on a contract, advises Rachael Ives, marketing manager at The Link.

Be aware of the different ways in which charges are worked out. With contracts, you get "inclusive" minutes that let you call rival networks at no extra cost. But pre-pay deals tend to have "step" tariffs, where, instead of a flat rate, you pay high charges for a short period before the cost per minute drops sharply.

Once you've found a deal that matches your budget, check how much it costs either to use your contract phone once you've used up your monthly inclusive minutes, or to call a rival network on your pre-pay phone.

For example, Vodafone's Anytime 100 contract costs £15 a month for 100 minutes of calls to any mobile network. But after you've used up these minutes, a five-minute daytime call to a rival network costs £1.75.

With pre-pay deals, the rise in charges can be similarly dramatic. For landline numbers and other O ₂ mobiles, O ₂'s pre-pay Talkalot step tariff charges 25p per minute for the first three minutes, and 5p a minute after that. But calls to other mobiles cost 40p a minute at all times.

Watch out, too, for the insurance deals you are likely to be offered when moving to a new provider. The consumer maga- zine Which? says that, if you have a contract mobile, it's not worth getting cover unless this pays out for fraudulent calls made on a stolen phone. And if you have a pre-pay mobile, insurance may simply work out too expensive: the best cover Which? found to protect an £80 pre-pay phone against theft was £25 a year.

It's important to check the small print of any insurance deal for exclusions. For example, some providers won't cover you if your handset is stolen from your car or if you mislay it. Look also at the excess charged for claims made on the policy: this is typically £25 to £30.

If you are currently locked in to a mobile contract and feel you are paying too much for it, you won't be able to cancel unless you pay the line rental for the remainder of the contract period.

If that would be too expensive, you could try switching to a cheaper tariff with the same provider until the contract expires. It shouldn't cost you anything to do this, although if you have only just bought your phone, you may have to wait a few months before you can trade down to a cheaper rate.

The 'Which?' website has a tariff selector to help you find the deal that best suits your needs. Go to www.switchwithwhich.co.uk