How to save money on your phone bill

People typically spend an average of £330 a year on their mobile, which works out at £27.50 a month. However, our Money Saving Expert Martin Lewis says if you pay more than £15 a month, it’s likely you’re wasting your cash. He’s here to help you halve your bill.

1. Are you paying more than £15 a month?

Take Virgin Mobile’s 12-month Sim-only contract, for example. It comes with unlimited minutes, unlimited texts and a big 3GB of 3G data for £15/month. So I’m going to use this as my benchmark highest price as it should meet the needs of all but the heaviest data users. The only valid reasons for paying more are:

- Your current contract includes the cost of a handset.- You pay extra for 4G (where the benchmark is £18/month). - You have a low credit score so can't get a contract.- You're paying more for a really hefty data allowance.

Yet even if you've got one of these excuses, many can still cut costs...

2. Don't want to switch? Haggle, haggle and er, haggle.

If you're near or beyond your contract's end you're wielding a powerful weapon: loyalty.

Tell your provider you want to stay, but your deal isn't good enough, then ask what they can do. If it's still not good enough ask to speak to 'disconnections', which internally is often called 'retentions' as its job is to keep you. It has far more discretion to give stronger deals.

According to a poll we conducted in November, success rates from those who’ve tried to haggle with the major networks are: Vodafone 73%, Virgin 72%, EE 66%, O2 57%, Three 53% and Tesco 52%.

Here’s an example emailed in to me to inspire you: “Recently my TalkTalk 12-month Sim-only deal was coming to an end. Initially I was offered a 12-month deal of 300 mins worth of calls, 300 texts and 500MB of data for £7 per month.

“After a five minute haggle I got a fantastic 12-month Sim-only deal of 3GB of data, 3,000 texts and 1,300 minutes for an incredible £3.75 per month.”

3. With contracts, the aim's to perfectly match inclusive minutes, texts and data to your usage. Underuse tends to mean you're overpaying on the monthly fee. Overuse usually means you're paying too much for extra minutes/texts/data.

- Bill analysis: Allow BillMonitor to log into your online mobile statement. It then analyses your past three bills to show cheaper options.

- Discounted Deals: Many resellers (for example, Carphone Warehouse) offer slightly cheaper versions of networks’ deals, MobilePhoneCheckercompares these.

4. Beware getting your handset on a contract – a 52% APR loan could be cheaper.

Many people get a contract as they can't pay for flash new handsets such as the iPhone 6 or Samsung Galaxy S5 upfront. Yet this is usually far more expensive than just buying the handset and getting a separate cheap Sim-only deal. Obviously saving up is the best bet – but if you’re not going to, then the facts behind this are clinical.

In effect, companies are lending you the money for a handset and they’re making you repay it over two years, but they don’t quote an interest rate. I did some research on this, which showed that in some cases you’d be better off buying the handset directly and taking its Sim-only deal, even with a loan at 52% APR over two years, than taking a contract. Of course, I'm not suggesting you do that, but it means you should never assume these mobile deals are good.

And it’s worth remembering that when you apply for a contract, just like a loan, the provider credit scores you and defaults will go on your file. So if it looks like a loan and smells like a loan, treat it like one – and compare it to other lending out there. Read Martin’s Best Buy 0% credit card guide for how you can borrow interest free, if you’re careful.

5. Top Sim-only deals if you don't need a new handset.

A Sim card is the little rectangular chip you put in the back of a phone that gives it its identity. If you're happy with your handset, the best deals often come from switching Sim.

You can only do this if your handset isn't locked to one network's Sims. If it is, and the new Sim is on another network, you can usually unlock for free or for under £20.

For the top tariffs, as well as the Virgin tariff mentioned in point 1 (which piggybacks the EE network), it’s worth checking outGiffgaff. This provider piggybacks the O2 network, and offers a range of Sim-only, month-long 'goody bags' with no contract and no credit score. For example, £18/month gets you 2,000 minutes, unlimited texts and 3G data (1,000 minutes, unlimited texts and 5GB if you want 4G), or £7.50/month gets 200 minutes, unlimited texts and 250MB.

There’s also Three's PAYG Sim, which is good for low users. This is free to get and costs 3p/minute for calls, 2p/text and 1p/MB of mobile data used. If you top up a minimum of £10 the first 150MB of data after each top-up is free. The monetary credit remains until it’s used, while the free data lasts 30 days.

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