Cheaper to buy phone outright?

[Anonymous]

After being an O2 customer for several years I decided to look at upgrading to the iPhone 6.

I found a pay monthly option of £9.99 up front + £48/month for the iphone 6 64GB

O2 says that the device payment part is interest free over the 24 month period, making the device cost of the plan (619-9.99)/24 = £25.38/month. Subtracting this means the airtime portion of the tariff is £22.62/month.

However, looking on sim-only contracts, the EXACT SAME minutes, texts and data is available for only £20/month...

Where does this extra £2.62 come from, since the device repayment is "interest free" ?

It would be cheaper to purchase the phone outright and get a cheap monthly sim-only contract, for example, the 3 network offers similar for only £10/month, meaning over the course of the contract I would save over £300 by switching to 3 instead of O2!

[Anonymous]

But putting the other network aside, what I'm highlighting here is the disparity in O2's own tariffs:

Cost of iPhone is £619

1. O2 offers 2GB data, unlimited texts and minutes for £20/month sim only

2. O2 offers 2GB data, unlimited texts and minutes + iphone 6 for £48/month + £9.99 up front

over 24 months:

Option 1 costs: £1099

Option 2 costs: £1161.99

O2 says that the device repayment is interest free, so either:

- O2 is charging you £681.99 for the iPhone instead of £619

- O2 is adding an extra £2.62 per month for the same minutes, texts and data

- The device isn't interest free and this claim is false, because you are paying extra to pay it monthly

[Anonymous]

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@Anonymous wrote:

But putting the other network aside, what I'm highlighting here is the disparity in O2's own tariffs:

Cost of iPhone is £619

1. O2 offers 2GB data, unlimited texts and minutes for £20/month sim only

2. O2 offers 2GB data, unlimited texts and minutes + iphone 6 for £48/month + £9.99 up front

over 24 months:

Option 1 costs: £1099

Option 2 costs: £1161.99

O2 says that the device repayment is interest free, so either:

- O2 is charging you £681.99 for the iPhone instead of £619

- O2 is adding an extra £2.62 per month for the same minutes, texts and data

- The device isn't interest free and this claim is false, because you are paying extra to pay it monthly

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It would be O2 charging £681.99 for the handset.

It has always been the case that handsets are cheaper (subsidised) through 3rd party dealers rather than through the networks directly......unless you can haggle a good deal through the retentions team!!

[Anonymous]

But you can buy the handset directly from O2 for only £619! So really, they're charging you more for the handset, AND getting 24 months of your continued custom! Ridiculous

[Anonymous]

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@Anonymous wrote:

But you can buy the handset directly from O2 for only £619! So really, they're charging you more for the handset, AND getting 24 months of your continued custom! Ridiculous

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Just for the privilige of spreading the cost over 24 months i assume !

[jonsie]

Admittedly O2 do charge more for the handset on some deals. Whether you choose to pay it is down to you. Many items cost more when taking out a credit plan but they aren't charging interest just inflating the price. Not right but you have other options.

[Anonymous]

I assume we're talking about O2 Refresh?

The £619 is what they're saying it would cost to buy the handset outright and the same price quoted on the Apple site, but they'll charge 29.71/month so you're paying 713.04

The upfront fee varies on how much Data you want 9.99 for 2Gb and 79.99 for 5Gb.

The Airtime bill is £23/month plus any RPI.

If you look at the example if gives the device plan at £25 x 24 months, so you're only paying £600 for the handset, but as its on Refresh, you have the option to pay off at anytime.

[Anonymous]

I have never and would never take out a phone contract. I always buy my own phones. And I avoid tariff bundles as much as possible, because it's rare or impossible for me to come close to using what I've paid for.

Some time in the future, just like PPI and all the other things that always looked stupid and then turned out to be exactly as stupid as they looked, there will be an investigation into mis-selling, and all the people who were sensible enough to avoid outrageous phone contracts will have to subsidise payouts to those who took them out. 

I appreciate if you can't afford to pay for a phone outright, or don't qualify for a bank loan, you might have to take out a contract with a phone company. And then, sadly, you'll get ripped off.  But it's hard to see any reason for doing so if you can afford not to.