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 Helpful advice from ASIC on getting the right mobile phone & plan
Entering the phone zone
It's hard to imagine life without a mobile phone, but it can cost you a bomb if you buy the wrong phone or plan.
Follow our tips to get a mobile phone deal you can afford.
How much can you afford?
Play it safe and work out your budget before you shop.
Add up what you earn, subtract what you spend on rent, food, bills, petrol, fares and any other regular expenses. The money left over can be spent on things you want, including your mobile.
Use our budget planner to help.
Know your limits so you don't end up in debt. If you don't pay your mobile bills on time you could end up with a poor credit rating and even have problems getting a loan in the future.
Case study:
Vinh's 'free' phone on a 'capped' plan "Vinh, 16, desperately wanted to get rid of the pre-paid mobile his mum gave him when he was 13. One phone shop offered him a free phone on a 24-month contract for $29 per month that would give him calls and texts worth $150 each month. (This is called a $29 cap plan.)
When Vinh got his first bill, it was $160 because he had more calls than were covered by his cap. The next bill was $170 because Vinh had browsed the web on his phone, but data downloads were not included in his plan.
Vinh fell behind with his payments. He got an overdue notice and then a disconnection notice that included a $400 early (contract) termination fee. Finally, a debt collector visited him, asking for $700.
'I didn't know what to do. I ended up calling the Telecommunications Industry Ombudsman. They helped me to get the termination fee waived, but I still had to borrow money from my dad to pay for the rest. It was really messy. I got a black mark on my credit record for not paying… which might be a problem when I try to get a credit card or even a mortgage. I'm really careful with my mobile now.'
Choose a mobile phone
With so many mobile and plan options, take the time to look around online and in the shops until you find the mobile phone you want for the price you're after.
Don't rely on the salesperson to tell you everything: read your mobile phone contract yourself. It will become the official record of your deal. Only sign when you fully understand what you are getting. Ask your parents, or someone with experience, for help if there's something you don't understand.
Check out the Mobile Moola Matters short film, created by Kenny Campbell, 15, Robert Austin, 14, and Ryan Presley, 14, from Alice Springs High School.
It's a humorous short film about mobile phones use and tips on how to control mobile phone spending.
What features do you really need?
The more features a phone has, the more it will cost. Consider the following:
- Do you really need internet access, digital camera, video recorder, laptop connection, Bluetooth, infrared and extra accessories (hands-free, car kit, belt clip)?
- How long does the battery last and does it come with a charger?
- How many phone numbers can you store in the phone's memory?
- How much data do you need to download per month?
Remember, call plan features – like voicemail, internet and email – can still cost money each time you use them. Ringtones and downloads seem cool in the ads but they will cost extra.
Ask your provider if you are being charged for any premium or paid services.
In NSW, one in five people aged between 12 and 20 has been charged for a mobile phone service they did not know they had signed up for.
Be really careful before signing up to deals that offer 'free ringtone downloads' or 'free SMS competitions'. Many people get slugged with unexpected charges.
See SCAMwatch: Mobile phone scams.
What about coverage?
Not all mobile phone providers have good coverage outside major cities. Ask to see coverage maps so you can check the areas that have no coverage.
Decide on a pre-paid plan or a contract
Pre-paid
Pre-paid means you buy 'credit' to pay for calls and services before you use them. This can make your calls more expensive but is a great way to make sure you don't get into debt. Once you've used up your credit, you can't make any more calls until you put more money on your phone.
If you buy a pre-paid phone, you might find that your mobile service provider has locked your phone's SIM card to their network. This means you might have to pay up to $150 to 'unlock' the phone if you switch to another mobile service provider.
Contract
Smart tip
Before you sign, find out how much it costs to get out of the contract early. It can cost up to $150 to unlock your phone if you switch service providers.
When you sign up to a mobile phone contract, you usually have to choose a 'cap'. A cap is the amount you pay each month to make calls, send texts, browse for data and use the other services on your phone.
If you continually go over your cap, then depending on the rates for your mobile contract, it would probably be cheaper for you to increase your cap than to pay for the extra each month.
To get the right contract and choose the best capped plan for you, work out: - How many calls you would make in a month
- How long your calls usually last
- What time you usually make calls (e.g. before and after school hours)
Most contracts are for 12, 24 or 36 months. You get a network connection, a handset and a number of free calls, texts and downloads each month. In return, you pay: - An access charge
- A 'flag charge' (a call connection fee) on each call
- Timed call costs (a charge based on how long your call lasts e.g. $1 for every 30 seconds)
Usually plans with high access charges have lower call costs. Plans that charge calls per second instead of in 30-second blocks can also save you money.
If you already own a handset you can pay month-by-month without signing a long-term contract. Calls are usually cheaper if you make them in off-peak times. Look up the cheaper times on your call charges schedule and make your calls at these times.
Decide on warranty and insurance
Warranty
When you buy a new phone you have the basic consumer right to a phone of acceptable quality. If your new phone is faulty or doesn't work, you have the right to get it repaired or replaced, or to get a refund, depending on the situation. Keep your receipts and network service connection agreement as proof of purchase.
Some stores may suggest you buy an 'extended warranty': an additional warranty that covers you for repairs and maintenance for a given period. But be aware that this may not give you any more rights than you have already. If you're thinking about an extended warranty, check the service agreement and conditions to see where you have to take the phone for repairs, and if it covers spare parts, labour and a replacement phone.
Insurance
Insurance is optional. It usually covers loss, accidental damage and theft (but may not cover you if your phone is stolen when you leave it unattended). Before you pay for insurance, find out if your phone is already covered by your home and contents, or car insurance.
If you have problems with your mobile
If your phone isn't working, contact: - The store that sold you the phone or your network provider to try and sort out the problem.
- The fair trading or consumer affairs office in your state or territory if you have problems with the store that sold you the phone, or about faulty recharge cards.
- If your problem is with a network service provider or being overcharged for bills, call the
Telecommunications Industry Ombudsman (TIO) on 1800 062 058. The TIO will also examine complaints about faulty handsets where the handset was bought as part of a contract or bundled deal.
If you're having problems managing your mobile phone bills or if you're in debt, talk to your mobile service provider or the TIO immediately. Find out more about
managing debts .
The mobile phones and features that look great in the ads may not be right for you, and may even get you into debt. You're better off with a mobile you can afford.
Related links
This article reproduced with permission of ASIC. Source: MoneySmart website, http://www.moneysmart.gov.au, 28 April 2011'
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Feature: Buying A Mobile Phone