New research from Barclays Partner Finance explores the ways in which consumers buy mobile phones, and the misconceptions that could be costing them hundreds of pounds.
The study reveals a high degree of misunderstanding and confusion about the most cost-effective way to get your hands on the latest mobile device. More than four in 10 (44 per cent) Brits who opt for a monthly contract (bundling together a handset, data and minutes) do so because they think it’s cheaper than buying a handset upfront, and then taking out a separate SIM-only deal.
In reality, bundled contracts are usually more expensive than buying a handset with a separate SIM-only plan. For example, customers could save up to £270 on the new iPhone 11 by purchasing the handset directly from Apple using the new pay-by-instalments deal from Barclays Partner Finance2, alongside a separate unlimited data SIM-only contract, compared to a bundled unlimited data contract from the major mobile phone networks3.
Affordability myths also extend beyond the overall cost of the contract. Many think the only alternative to a bundled plan is a large initial cash outlay: 20 per cent incorrectly believe that the only way to buy a handset separately from their SIM is to pay for the handset in full when they purchase it. This could be why 51 per cent of Brits say they chose a bundled contract over other options to ‘spread out’ the cost of their handset, with four in 10 (39 per cent) believing they could not have afforded their handset without a bundled contract.
Convenience is also a major driver of consumer behaviour – when asked about the key factors influencing the purchase of a new phone, one in five (20 per cent) Brits prioritised the ability to get everything from one provider, and almost three in 10 (28 per cent) admitted to not shopping around to find the best deal. Of those that do not shop around, almost half (46 per cent) feel as though there is no point, as they wouldn’t save money by doing so.
This inertia can cost consumers even more money when their contract expires; almost half of Brits (45 per cent) have let their contract run on after the minimum term has ended, without trading up or renegotiating their monthly fee. The average person who continued to pay the same monthly fee after their contract had expired let it run over for seven extra months, at an additional cost of £121. This equates to almost £700m wasted across the UK4.
Barclays Partner Finance has launched a new interest-free deal which gives consumers a smart, cost-effective way to buy a new iPhone2, offering savings of up to £270 over a 24-month contract.3
By trading in their existing iPhone, either at an Apple Store or on apple.com, consumers will get a discount on the price of their new handset, and the remainder of the cost is spread over 24 monthly instalments, at 0 per cent interest, meaning that consumers do not have to pay the full amount upfront.
In addition to the cost saving, the new proposition offers iPhone users greater control and choice – the handset is not tied to any individual mobile network, so consumers can shop around for the SIM-only plan that’s right for them.
Since Apple also takes care of recycling the old device, consumers don’t even have to worry about disposing of the old hardware themselves.
To help Brits make smarter decisions about their mobile phone buying habits, Barclays Partner Finance has teamed up with money-saving specialist and founder of Be Clever with Your Cash, Andy Webb.
Commenting on the findings, Andy said: “Bundled contracts are currently the most popular way of buying a new phone, but consumers need to realise that they are also one of the most expensive. The cheapest option is almost always to buy the handset outright, and then to shop around for the best SIM-only deal. For those looking to buy the latest iPhone, the new interest-free deal from Barclays Partner Finance available at Apple is a great way to spread the cost of the handset into 24 more affordable monthly payments.”
Richard Brassey, Head of Retail at Barclays Partner Finance, said: “We’re proud to be giving consumers a smarter and more affordable way to own the latest iPhone, when buying directly from Apple. Interest-free finance is a win-win for consumers and retailers, because it gives consumers more control over their cash-flow, and it allows retailers to get their products into the hands and homes of a greater number of customers.”
For more information, please visit the Apple site.