Smartphone Contracts Result In Debt Problems For Some
Published: 18 April 2012 By Julian Stone Leave a Comment
Smartphone contracts are costing consumers more and resulting in more having debt problems as a result of paying their monthly fees.
Smartphones are now being used ‘all the time’, with some even using them in bed.
As fantastic as they are though, the contracts for them add a hefty sum to your monthly budget. Many people are finding they cannot manage their budget as a result and are ending up with debt problems.
Debt advice charity the Money Advice Trust is reporting that its National Debtline has seen a sharp rise in calls from people with debts for their phone.
The number has risen from 5,830 calls from people with telephone debts in 2007 (representing 3.9% of all calls) to a staggering 14,651 calls last year (representing 7.4% of all calls).
The problem has accelerated further in the first three months of this year with the service receiving over 4,000 calls for help with telephone debts.
Joanna Elson OBE, Chief Executive of the Money Advice Trust, commented: “When you take out an expensive contract for a smart phone you are in effect taking out a loan to pay for the handset.
“Smartphones are sold without contracts for upwards of £500, which would prohibit many from getting hold of one, but with a contract the upfront fee all but disappears, to be replaced by a monthly cost incorporating much of the phone’s usage costs as well.
“When people fall foul of that monthly fee, they can find themselves with a growing debt problem.
She added “Organisations like National Debtline can help you put together a budget and identify whether you are paying too much for your phone contract. People can also go through this process online at www.mymoneysteps.org/.
“Advice can also help prioritise debts and come up with a plan for tackling them, as well as offering tips on how to contact your provider to arrange an affordable repayment plan.”
MoneyHighStreet said: “Many people are seduced by the latest ‘must have’ gadgets. Whether you consider a smartphone a gadget or a vital tool for your day to day activity, they are here to stay.
“In fact a report showed that a quarter of Britons now have a smartphone and are becoming addicted to them.
“Unfortunately though it seems too many are taking on expensive mobile phone contracts that they simply cannot afford.
“It is vital to keep control of your expenses and ensure these don’t exceed your income. If your expenses do exceed your income, quite simply you will be faced with growing debt problems.
“Make sure you assess the impact of your desired mobile phone contract on your budget before you sign on the dotted line.
“Importantly, if you do find you are struggling with bills, the sooner you take action the better – debts are not likely to go away without your action.”