Capped mobile phone contracts: everything you need to know

Submitted by Abi on 18 November 2014 - 11:22am

It’s easy to run up big bills on a mobile contract and for those of us wanting to keep control of our spending the obvious choice is a Pay As You Go deal, but these can be a lot more expensive than a SIM-only plan. Our guide explains everything you need to know about capped mobile contracts and shows you how, with a SIM-only deal, you can keep control of your spending and save money.

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What is a capped contract and why is it useful?

A capped phone contract gives you a degree of flexibility and security by letting you decide how much you want to pay each month and limiting your mobile use to this amount. Capping your contract is a useful way to curb your spending and is particularly helpful if you want to keep track of your personal or family budget - especially if you want your children to have a mobile phone but worry about them spending outside of their plan on downloads and picture messages. 

How does mobile phone capping work?

There are two types of capped contracts:

Strict caps restrict you from spending outside of your plan by blocking you from using anything not included in your call, text and data allowance. So, any out of bundle calls to premium rate numbers or picture messages simply won’t work. If you need to, you can change your settings to allow you to use off-plan services by logging into your network account.

Caps with a safety buffer let you use a fixed amount over your monthly bill payment and means that you can still use your phone, up to your safety buffer limit, if you run out of allowances or you want to call premium numbers. You can choose to increase or decrease your buffer each month depending on what you need to do with your phone. 

What's not included in bill caps?

If you own a smartphone then it is still possible to overspend by downloading apps or by purchasing extras within apps. There are several ways you can pay for apps; a credit or debit card on your Google Play or Apple App Store account, via PayPal and even through ‘direct to carrier’ billing which means any purchases you make are added to your phone bill. If you are not the sole user of your phone then make sure you set a password that only you know for any purchases made using your phone to avoid unwanted spending. 

Giffgaff are the only network where this doesn't apply as all of their SIMs are pre-pay, similar to Pay as you Go but with cheaper bundles, and if you want to use anything outside of your inclusive allowance you'll need to top up your account with credit first. This makes giffgaff a great network if you want a deal for your children, or you just want to keep a tight hold on your own spending.

Which networks offer bill capping?

Currently only Tesco Mobile and Three let you cap your bill. Tesco Mobile run on O2’s network and operate a buffer system that lets you cap your spend from £2.50 up to £50 over your monthly bill amount.

Instead of a buffer, Three let you choose to block calls to numbers outside of your bundle and block calls once you have used all of your inclusive minutes. You can't set a data cap with Three because, like EE, once you have reached your data limit you'll need to buy an add-on to continue using online services. 

Only Tesco Mobile, Three, giffgaff and EE offer some form of capped services. Take a look at the table below to see how they vary.

Network Can I cap? Tell me more...
Avoid bill shock with a capped SIM only contract on Three

Data caps are applied automatically as soon as you use up your data allowance. Caps for out of plan calls can be activated and deactivated by logging into your My3 account.

Set your own safety buffer with a SIM only deal from Tesco Mobile

You can choose a safety buffer when you choose your Tesco Mobile plan and increase or decrease it via the Tesco Mobile app or your online account.

giffgaff's pre-pay SIM cards means no bill shock for you

Although you can't cap, there is no risk of surprise bills with giffgaff because if you want to use you phone for anything other than the calls, texts and data included in your Goodybag, you'll need to top-up your account online first.

Data caps apply with EE SIM only, but you'll need to monitor your calls and texts

Data caps exist in that once you have used up your allowance, EE automatically stops your access to data until you buy an add-on. The same doesn't apply for calls and texts so you'll need to check your usage.

What happens if I don’t set a mobile bill cap?

Without a cap in place you will be charged standard network rates for services outside of your inclusive allowance and bundle, but it is fairly easy to monitor your usage. All networks offer some way of keeping track of your bill either by texting your provider, logging into your online account or using the mobile operators app, if you have a smartphone.

Networks will also send you a text alert when you near your data limit and another once you have reached your data limit. If you continue to use data then you'll be charged at standard rates. These vary between networks and can be very expensive, particularly if you are traveling overseas, so check your network's price plan if you are unsure just how much you’ll be charged, or visit our 'out of bundle charges' comparison page.

You can find out more about using your phone when traveling in our guide 'Why expensive roaming charges are history'.

Alternatives to mobile phone capping 

Pre-pay contracts

If your network doesn’t offer capped contracts there are still ways to keep control of your spend. Pay As You Go contracts are one option, though calls, texts and data are usually more expensive than on SIM-only deals. Some operators, like giffgaff who use O2's network, offer pre-paid contracts. This is a useful compromise between a Pay As You Go and a Pay Monthly contract as it lets you auto-renew your Goodybag each month, so you don’t need to remember to top-up and you can’t spend any money outside of your plan unless you actively add a cash top-up to your account.

You can also change your Goodybag each month depending on what you need, and giffgaff will even let you know if they think you could save money by switching to a lower plan. However, giffgaff lacks the convenience that Tesco Mobile & Three offer as you need to have the money available in your bank account in order to pre-pay for the services. Both Tesco Mobile and Three on the other hand are billed at the end of the month, which is helpful if you are short of cash before payday. 

Shared plans

Some networks, including EE and Vodafone, offer shared plans, these let you add multiple devices to one plan and are really useful if you want to manage your family's mobile devices from one account. Everyone on the plan gets unlimited calls and texts but you decide how much data each member gets. This could be divided equally or allocated depending on the persons usage; for example one member could have 3GB and another 500MB.

The choice of shared plans are fairly limited at the moment and restrictions do apply. With EE at least one member has to have a phone contract which does make the deal more expensive and isn't much help if you want to go SIM-only. With plans from Tesco Mobile, Three and giffgaff starting from as little as £5 a month it might be much more affordable to recycle your old phones and mobile devices by passing them on to other family members and choosing a capped SIM-only deal to suit each of the family's requirements instead.

Our recommendations...

Giffgaff is the network to choose if you are concerned about overspending, and is particularly good if you want a contract for your children, as you can only use your inclusive allowances and can't spend off-plan without topping up first.

If you want a contract with more flexibility then we'd recommend a SIM-only deal with Tesco Mobile. Their cap is comprehensive, once you hit your limit that's it unless you increase your safety buffer, but the ability to pay at the end of the month instead of up front is really useful and means you'll never be without your phone if you're short of cash before pay day.

Have you been caught out by out of bundle charges or are you a capped-contract aficionado? Let us know you thoughts and questions in the comment section below.