New MoneySavingExpert warning over signing up for a new mobile phone contract

Mobile phone operators are preparing to introduce steep price hikes above the rate of inflation.

MoneySavingExpert.com has warned about the planned cost increases, which affect customers who sign up to a new deal or upgrade to a fresh contract.

The changes will land them with hefty price increases next year, reports the Liverpool Echo.

Mobile firms often increase costs each year but, according to MSE, this is usually in line with inflation whereas now the costs are much higher.

Vodafone and Three pay-monthly mobile or broadband customers could see themselves locked into costly price rises following a shift in pricing from the big networks, with many new and re-contracting customers set to have bills increased by more than inflation in 2021.

Once you’ve agreed to a new deal you’ll be locked into the price rise.

What’s happening?

Three will raise prices next April by 4.5% for pay-monthly customers who take out a new deal or renew from October 29 2020 onwards. This affects all pay-monthly customers, including those with mobile contracts, Sim-only deals, mobile broadband and home broadband.

The hike will apply annually, meaning bills are due to go up by 4.5% in April 2022 too – and annually after that. If you signed a new deal or renewed with Three before October 29 2020, this price increase won’t apply to you. Instead, next April your bill will only increase by inflation, as it did in May.

Similarly, Vodafone will raise prices next April by inflation and 3.9% for pay-monthly customers who take out a new deal or renew from December 9 2020 onwards.

Also Check:  Co-operative Bank to close 18 branches and lose 350 jobs

Like Three, this affects all pay-monthly customers, including those with mobile contracts, Sim-only and home broadband deals, as well as tablet, Apple and Samsung Watch, OneNumber for Watch and Vodafone Basics plans.

Again, the price hike will apply annually, so bills will go up by inflation plus a further 3.9% in April 2022 too, and annually after that. If you signed a new deal or renew with Vodafone before December 9 2020, this price increase will not apply to you. Instead, next April your bill will only increase by inflation, as it did this year.

MSE states many firms regularly increase prices mid-contract. They’re allowed to do this as long as they warn customers upon signing up, but until this year, mid-contract price rises were typically only at the rate of inflation.

The notable change now is that some firms are starting to lock in above-inflationary price rises, meaning your bills will go up much more steeply.

As well as Vodafone and Three, MSE reports seeing BT, EE and Plusnet do this already this year.

MSE says this news doesn’t mean you should rule out renewing or signing a new contract with Three or Vodafone but adds it’s important to factor it in to your decision.