Rather than getting a 24-month contract, a better alternative is now buying your mobile phone separately from the tariff. This saves money, increases flexibility and gives greater transparency.

One of the topics we’ve frequently talked about on this blog is the disadvantages of getting a 24-month contract. From being locked in to the same provider and having the same handset for two years, to having little flexibility on when and how you change these two things, better alternatives now exist to getting a 24-month contract.

For most people, there are now substantial benefits to making an unbundled purchase (or in other words, buying your mobile phone and SIM card on separate agreements). Not only can you save money by side-stepping the hidden APRs on a 24-month contract, you also gain extra flexibility on changing your handset and mobile network, and get greater transparency about how much each one really costs.

In this article, we’ll discuss the benefits of buying your mobile phone and SIM card on separate agreements (this is sometimes known as an ‘unbundled deal’). We’ll then compare the best ways of getting an unbundled deal, including from retailers like Unshackled, directly from the mobile network and by doing-it-yourself.

Buying Your Mobile Phone Unbundled

24-Month Contracts

Traditionally, lots of UK consumers have bought their smartphones on a 24-month contract.

On a 24-month contract, you’ll normally get a brand new smartphone for a reduced upfront price (sometimes, you may not even need to pay anything upfront for the handset). In exchange, you’ll need to pay higher monthly line rental, every month for the next 24 months.

In effect, a 24-month contract is like borrowing from your mobile network the upfront amount to buy a new handset. You’ll then pay back the cost of the handset in monthly instalments over 24 months. Although 24-month contracts are not explicitly advertised as a loan, you’ll still need to undergo a credit check and will often pay hidden APRs of around 30%.

Not only that, you’ll be locked in to one mobile network and one handset for a period of 2 years with punitive exit fees for changing either one too early. There’s also very little transparency about how much you’re paying for your handset and for your airtime (the two things are bundled together into a single monthly price).

Benefits of Unbundled

By buying your mobile phone separately from your airtime tariff, you’ll be taking something that’s known as an “unbundled” deal. There are three key benefits to doing this:

  1. You can save money compared to a 24-month contract. With a 24-month contract, you’ll often need to pay hidden APRs of about 30%. By buying separately, you’re able to avoid this, often saving you hundreds of pounds in the process.
  2. You’ll have more flexibility to change your handset or tariff. You’ll be able to change your handset or mobile network separately and independently from each other. This can be useful, for instance, if your old phone gets lost or stolen. Alternatively, if your old smartphone stops working, if you’d like to upgrade to a newer model or if you’d like to change mobile networks to benefit from better coverage or lower prices. With a 24-month contract, you’ll need to change both at the same time (meaning a larger early termination fee if you change during the minimum term).
  3. You’ll have greater transparency about how much your handset & tariff are really costing. You’ll know exactly how much you’re paying for your handset, and how much you’re paying for your airtime. This makes it easier to compare against other handsets and mobile networks.

For more information about how an unbundled deal compares to a 24-month contract, please see our article on hidden APRs.

Unbundled Phone Providers

There are three ways of buying your next mobile phone on an unbundled basis. You can either go to a retailer like Unshackled that specialises in unbundled phone deals, you can go to a mobile network that offers unbundled deals directly, or you can do-it-yourself by buying a handset and SIM card from two different retailers.


Unshackled.com is a new online retailer, from the executive team previously behind Phones4u. The retailer allows you to buy an unlocked smartphone, which you can pay for either outright or on a 24-month payment plan. Handsets available from Unshackled include the latest iPhone and Samsung Galaxy smartphones.

At Unshackled, the cheapest thing to do is to buy the handset outright by making a one-off lump sum payment. Anyone wanting to use the pay monthly option will need to pay a bit of interest, but should still save money compared to getting a traditional 24-month contract. Unshackled has clear APRs (from 9.7% APR representative over 24 months) and you can normally settle your loan early to reduce the amount of interest that’s paid.

After you choose your handset, a SIM-only deal can then be purchased separately on the website. There are tariffs from 16 different mobile networks currently offered. This will be on a totally separate agreement to your handset, so you’ll be able to change either one independently in the future.

Mobile Networks

  • giffgaff
  • O2
  • Tesco Mobile
  • Virgin Mobile

There are several mobile networks who currently offer an unbundled deal directly to the consumer. These are the giffgaff phone store, O2 Refresh, Tesco Mobile Anytime Upgrade and Virgin Mobile Freestyle.

With these unbundled deals, you’ll have a separate payment plan for your handset and tariff. This means you can upgrade your handset at any time, by paying off your handset plan and getting a new one. Often, you can also change your tariff but with a couple of restrictions (for instance, if you’re moving to another network, you may also need to pay off the remainder of your handset plan).

The following table shows a side-by-side comparison of how much it would cost to buy the 32GB iPhone 7 from Unshackled and directly from each mobile networks:

Unshackled.com giffgaff O2 Tesco Mobile Virgin Mobile
Unlocked Handset
Airtime Provider Choose from
14 networks
giffgaff O2 Tesco Mobile Virgin Mobile
Finance Provider Zopa RateSetter O2 Tesco Mobile Virgin Media Mobile Finance
Handset Financing
Tariff Name Unshackled Goodybags Refresh Anytime Upgrade Freestyle
One-Off Price £599 £579 £657.99 £666 £720
Interest Rate 9.7% APR 18.9% APR 0.0% APR 0.0% APR 0.0% APR
Upfront Payment £19 £25 £9.99 £0 £0
Monthly Payment £26.57/month* £28.49/month* £27/month £27.75/month £30/month
Total Amount Payable £637.68* £684.76* £657.99 £666 £720

Comparison of handset financing options for the 32GB Apple iPhone 7. Prices were correct on the 18th January 2017. * With Unshackled.com and giffgaff, you can reduce the total amount payable either by increasing your upfront payment or by paying off your loan early.

Do It Yourself

Finally, as an alternative to the above, you can always do-it-yourself by buying an unlocked handset and then getting the best value SIM-only deal.

Good retailers for buying an unlocked handset off-contract include John Lewis, Unshackled, Amazon and Argos. Sometimes, you can also buy directly from the manufacturer (e.g. from the Apple, HTC, Motorola, Samsung or Sony websites). There’s more information in our guide about buying an unlocked smartphone.

Once you’ve bought an unlocked handset, you can then choose from one of the best value SIM-only deals available on the market. With an unlocked handset, you’ll be able to use any UK mobile network and you’ll also be able to change mobile networks whenever you like.

More Information

For more information, please see our in-depth guide to buying an unlocked smartphone and getting a SIM-only tariff for it.

Your Comments 7 so far

We'd love to hear your thoughts and any questions you may have. So far, we've received 7 comments from readers. You can add your own comment here.

  • Ken
    Have been reading your blog and would like to take this opportunity to thank you. On behalf of all us not so smart phone users. for your time. say Thank You for all your help.

      • Bryan richardson replied:

        Well my eyes have been truly opened with this info and guidance, ive been with 02 for many years an looking back ive paid thousands of pounds over the top on 4 separate accounts .
        Thank you .

  • Hello

    I’m wanting to get an unlocked smartphone, as well as change provider (my coverage with EE is very patchy) but I want to keep my phone number. Will this be possible? (i.e. get rid of my SIM but keep my number).

    Many thanks

    • Hi Charles,
      Many thanks for your comment. Yes, of course: it’s easy to move your phone number from one network to another. You just need to ask EE to provide you with a PAC Code, which should then be given to your new mobile network.
      Hope this helps,

  • I need to buy a new bog standard handset. I always use PAUgo but I wish to retain my SIM card and existing phone no.. How should I accomplish this. Will my 8+ yrs old SIM card be OK to use in a new phone. My provider is Vodafone and I wish to retain this company. Please, some helpful advice required.

    • Hi Tee,
      Many thanks for your comment. Yes, you can buy an unlocked smartphone and slot your existing Vodafone SIM card inside it. However, if your new mobile phone takes a smaller Micro SIM or Nano SIM, you may need to get a replacement SIM card to fit in your new device (though don’t shy away from doing this, as it’s a very straightforward process).

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