What does upfront cost mean on phone contracts?

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You've heard it's smart to pay some of your phone contract upfront. But what are the pros and cons? And how much should you expect to pay as a lump sum? We take a look at upfront costs on mobile phone contracts.

Upfront contract costs explained

When you buy a phone on a monthly contract, you’ll be expected to pay it off in monthly instalments. But with newer phones you may also be asked for a lump sum at the point you sign up, as a deposit. This is what mobile phone networks and retailers refer to as an upfront charge.

Mobile phone networks used the upfront free to calculate the overall cost of the contract. As a rule of thumb you'll find that when you’re comparing deals for the same phone, the more you pay upfront, the cheaper your monthly premiums will be.

You can, of course, find phone contracts with nothing to pay upfront. But these will typically be handsets that have been on the market for a while.

What are the advantages and disadvantages of paying upfront on a phone contract?

  • The more you pay upfront, the cheaper your monthly premiums
  • You’ll be able to take your pick of the newest phones

However, when you pay something upfront be mindful that..

  • You’ll need to find a lump sum, sometimes as much as a few hundred pounds
  • The lump sum is on top of your first monthly premium. So you could be laying out a fair bit of money in a single month

How much should I expect to pay upfront?

man using phone

For the newest, top-of-the-range phones expect to up to £200 upfront. Or even more if you're looking at plus-sized models of new iPhones or Samsung Galaxy S handsets.

But in general we’d say an upfront fee of between £50 and £100 is a fair amount to pay if you want to secure a cheaper monthly premium on most handsets.

This can trim your monthly payments by £5-£10 per month, which means there's that much less to find every month.

Weighing up a phone contract with an upfront cost? We take a look at whether it works out cheaper in our guide.

Should I pay for my phone completely upfront?

If you’re able to pay upfront for your phone and buy it completely off-contract and SIM-free, you’ll save money.

We’ve crunched the numbers and worked out that it’s often cheaper by hundreds of pounds to buy a phone outright and then get a SIM-only deal than it is to buy the same phone with the same allowances on a monthly contract.

The catch is buying a phone outright it’s only an option if you’ve got a substantial sum of money saved up.

Not least because the newest, premium smartphones cost as much as £1,500. While mid-range smartphones sell for between £500-£600.