Buying a Phone

Buying a new phone can be confusing.  Here are some things to be aware of.

There are many types of phones and options for plans available, so it is important to carefully select the right option for you based on your budget and needs.

Plans, regardless of whether they are on prepaid or monthly contracts, generally include calls, texting and data allowances. Data plans allow you to access the internet, download apps and receive emails without the need to connect to a wifi network. Be aware though, because exceeding the data package can mean large extra costs on top of your regular payments. It is not wise to travel overseas and leave your data package running, as overseas data can cost many times more than what we are charged at home.

Monthly Contracts

A ‘plan’ is a monthly contract for the use of a phone, usually for a period of 24 months. You pay an amount each month to use the phone, which includes a monthly cost for the purchase of the phone as well as a specific amount of credit for calls, texts and data.  Additional text plans and data plans can be added to your monthly account if you find that you use more than your basic plan allows for.

Before entering into a plan, make sure you understand how much you will be paying each month. The charges for going over your plan limit can be very high. If you go over your included credit the phone company will not stop you from making phone calls, using the internet or texting, but will charge you at a higher rate.

When you purchase a phone you will need photo ID. Always read and understand the terms and conditions before signing a contract.

Prepaid

Prepaid phones and recharge cards can be a sensible option for some people. It allows you to pay a specified amount in exchange for credit and you cannot spend more than you paid for so you will not go into debt. Once the credit is spent, you can no longer make calls or text, but you may still be able to receive them.

You can manage your usage by logging into your online account and checking how much you have used of your available credit.

For more information, and some great advice, check out ASIC’s MoneySmart Rookie Phoney Deals video.