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How pay-as-you-go (PAYG) mobile plans work

By Steve McCaskill
Thursday, March 22nd 2018

A pay-as-you-go plan enables you to do just that - pay before you use, rather than after you use. PAYG used to be as simple as putting some credit on your phone and then paying a set rate for calls, texts and data, but now with the introduction of PAYG bundles things have become slightly more complex.

Pay-as-you-go (PAYG) tariffs revolutionised the mobile market when they were first launched in the 1990s. They made mobile phones more affordable and democratised a revolutionary technology that has become essential to daily life. Ironically, it is possible that because smartphones have become so important to us that PAYG has become less popular as people can’t risk not being connected.

But the inability to spend more than the credit you have in your account and the impossibility of nasty bill shock means they are still the tariff of choice for millions of people who want greater flexibility and control over their spending. Or perhaps they just want a mobile phone for emergencies and don’t need an expensive plan with call, data and text allowances they’ll never use.

These days, there are PAYG plans to suit all needs, from power users to occasional callers. But this choice has come at the expense of simplicity.

How does PAYG work?

The basic premise of PAYG is the same as it was 20 years ago; rather than paying a bill each month, you top up your credit whenever it’s low. This is done by calling or texting your operator, using an e-top-up card or even at a cash machine.

The minimum top-up is generally £5, and payments can be made in increments of the same amount. Most operators will notify you via text when your top up has been successful, and you can check your balance by texting a specific number or by checking your operator’s application.

Most operators will offer a range of PAYG handsets but of the disadvantages versus pay monthly is that these tend to be more expensive and some phones won’t be offered. If you already have a mobile phone to use, then its possible to get a free or heavily discounted SIM card to access an operator’s PAYG service (provided your phone is unlocked). Some might require a minimum top-up, but you’d need to do that anyway.

All four major networks – EE, O2, Three and Vodafone – offer pay-as-you-go plans, while Virgin Media, Tesco Mobile, giffgaff, Asda Mobile and iD Mobile also let you pre-pay for your service. BT Mobile and Sky Mobile only offer contract deals, while Talkmobile closed its PAYG service in August 2017.

Classic versus bundled PAYG deals

Some networks still allow you to access a ‘classic’ PAYG tariff where you use your credit to pay a set rate for calls, send texts and to access the mobile internet. But nearly all of them will want to get you onto a ‘bundle’ of calls, texts and data that lasts for one month. These offer much better value for money if you plan to use your phone on a regular basis, but they do blur the lines between contract and PAYG.

To get a bundle or ‘add-on’, you simply add sufficient credit to your account and purchase one from your operator, usually online or via an application. Some bundles are one-offs, while others are recurring, which means each month a set amount will be taken out of your balance to pay for the bundle.

These can be more expensive than a standard pay monthly tariff, but the advantage is that you don’t need a credit check and you still have clear idea of what you’re spending each month. What’s more, you can stop them at any time, and because it’s paid for in advance, you’ll never owe the operator an outstanding bill.

The downside to getting a bundle is that most of the allowances expire at the end of the month, whereas unused credit doesn’t expire as long as your account is active (more than on that later). Some networks, including Vodafone, let you ‘roll over’ unused call, data and text allowances into the following month.

Other factors to consider

Flexibility versus cost

Is the flexibility worth the additional cost? For occasional users, the answer is probably yes, but for others it may not be the case. Many of the PAYG bundles offered by operators have an equivalent SIM-only pay monthly plan or have fewer benefits, such as reduced allowances or no added bonuses like inclusive streaming.


Just as with a pay monthly tariff, you should check to see what an operator’s PAYG coverage is like before you sign up. There’s no point in accepting a great offer if you can’t use your phone. Most networks have a postcode checker so you can see what reception is like at home or in the office before you make a decision.

Click the logo and check you have coverage.


If you don’t use your PAYG phone, you might lose your connection, any credit on your account, and ultimately, your phone number unless you make a ‘chargeable’ activity on your phone. This might be a call, a text or a brief browsing session, while some networks will include just changing your account details as well.

The industry standard is six months, although some networks like Asda Mobile will offer a little more grace. It might still be possible to reactivate your account after this period, but once your number has been recycled it is gone forever. You also won’t be able to get any unused credit as the operator is under no obligation to return to this once you’ve splashed out.


Much of what made PAYG so appealing – cost, flexibility and control – 20 years ago, is still relevant now and there’s no doubt that you get more for your money in 2018 than you did in 1998. Many benefits that were once considered exclusive to a contract are now available on a pre-paid basis and this makes it much more cost-effective if you’re an infrequent user of your mobile.

The lack of a credit check is also a bonus for someone who has just turned 18 with no credit history to speak of, for someone who has a few blotches on their copybook, or for someone who has just moved to the UK and doesn’t have a permanent address.

But unless you’re completely sold on the idea of a flexible tariff, regular users might still be better off with a contract and the generous allowances they afford.

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