In times of economic uncertainty, it pays to carefully consider the commitment you’re make with a cellphone contract

Junk status. Downgrades. Inflation. Recession. Fuel price hikes. These are terms South Africans are exposed to on a daily basis. The reality is that there’s a great deal of uncertainty about the economy, which means that consumers need to consider their financial wellbeing.

Of course, reducing your debt and other financial commitments is an important first step to improving your situation. In this regard, Lance Krom, founder and managing director of cellphone contract comparison engine Phonefinder.co.za, says it’s important to consider the implications of making a 24-month financial commitment.

Since a cellphone is an indispensable tool in modern society, many people believe that a contract is an unavoidable monthly expense. While that may be true, Krom says there are a few important points to consider before signing, as this commits you to paying what can be a not-so-inconsequential amount of money every month for two years.

“It’s important that your decision makes economic and practical sense in the long run,” says Krom. To ensure that’s the case, he says it’s important to consider the following factors…

1. Select phones conscientiously

The largest cost component of a cellphone contract is normally the phone finance. “We all have our brand preferences and love to get the latest model, but it’s important to make a rational choice as it can mean a difference in price of a few hundred rand every month,” explains Krom.

“Before signing a contract, ask yourself if you need all the features and functionality offered in the phone you’re considering. You’ll likely find that you’d still be capable of communicating effectively with a more affordable model,” he adds. “Don’t fall into the trap of paying more for specs that you’ll never use. This can save you thousands of rands over the term of your contract.”

It’s also important to consider the insurance implications, continues Krom. “More expensive phones attract higher insurance premiums, which add to your monthly costs.”

1. Match your usage to a plan

Make sure the contract plan you select offers the best mix of voice minutes, data and messaging to meet your monthly usage needs.

“If you’ve been on prepaid and are thinking of switching, consider your historical usage patterns. If you use more data, find contracts that offer the biggest bundles, with fewer voice minutes,” suggests Krom. “By closely matching your usage patterns to a contract you won’t waste your money on SMS bundles that you’ll never use.”

This process is also important to ensure you don’t exceed your data and voice limits every month, as buying out of bundle can be more costly in the long run.

1. Compare options contract

Comparing contracts across all local telecoms providers can save you money, states Krom. “In the past this was a tedious manual process, but technology has simplified things with price comparison engines.”

An independent, free-to-use comparison engine like Phonefinder lets users search over 2,000 available contract options using multiple criteria, including handset manufacturer, network service provider and price range. “This makes it incredibly easy for consumers to find the best cellphone contract deal based on their specific preferences, and one that meets their budget,” explains Krom.

1. Understand the contract

Every cellphone provider has different cancellation policies, which generally come with penalties and additional costs. “This not only makes it essential that you understand the financial commitment you’re making, but makes the decision to purchase a contract you can afford, now and over the next 24 months, so important,” states Krom. So, before signing, read the fine print and ask the right questions to understand exactly what it is you’re signing up for.

1. Migration options

Even if you do your due diligence, you may find that your needs or circumstances change midway through your contract. If that happens, it’s important to know upfront what your migration options are.

“Some providers allow upward and parallel migrations at no additional cost,” says Krom. “This is helpful if your contract no longer meets your requirements due to a change in usage patterns. In this case, migrating to a plan that offers more (upward), or a plan that costs the same (parallel) but has a different allocation of voice, data and messages, can save you money.”

Certain providers also offer downward migration, which allows subscribers to move from a more expensive plan to one with a lower monthly subscription, without the need to cancel. “There is usually a migration fee, but this can be less than cancellation fees and costs, making it a better option if it’s available,” concludes Krom.