How to get your hands on the best mobile phone deals around

Not so many years ago, mobile phones were almost exclusively the preserve of the wealthy or the spivvy. Most people swore that they would never need one, and even as prices came down and their popularity exploded, many were slow converts to the revolution.

Today, even the hardest cynics seem to own one, and many families now shell out hundreds of pounds a month on their bills – a cost that they simply regard as a necessity, not a luxury. Children as young as three and pensioners as old as 90 are all in on the game, and most people would now tell you they simply can't be without their phone.

The good news is that, amidst this huge increase in popularity, the mobile phone market has become more competitive than ever. Free handsets, free gifts and even cashback are all on offer for the canny phone shopper. Unfortunately, however, for the average consumer, hunting for the best deal can prove rather a daunting task.

Although there are only five primary phone networks – Vodafone, O2, Orange, T-Mobile and 3 – there are dozens more that piggyback on top of these, from easyMobile to Virgin, Tesco and British Gas.

It's well worth the time and effort to shop around, though. Switching provider or playing hard ball with your existing network could save you hundreds of pounds a year. Here are a few simple steps to help you find the best deal.

What do you really need?

Rob Barnes of Moneysupermarket.com, the comparison site, says that before you start looking for a new deal, it's crucial to work out exactly how many minutes and texts you actually use each month. "Look back at your last three bills and find out how much you've been using," he says. "A lot of people get roped in by a flashy new handset on offer, and end up paying for far more than they need."

Barnes also points out that it's also worth considering if you need a new handset, and if you do, whether you need an expensive one with dozens of functions that you'll probably never use.

However, he adds that if you decide to hang on to your existing handset, it's worth remembering that you may not be given another chance to upgrade for free for 12 or 18 months – and new phones are more costly than you might think. "The average handset that you're given with a contract will cost you between £100 or £200 to buy separately, so you should think carefully before giving up the chance to get a new phone," he says.

Most phone providers will offer packages with a set number of free minutes and free texts for a fixed monthly fee. If you don't need a new handset, you should be able to negotiate extra minutes or texts, or a discount on your bills.

Give your existing provider a hard time

Although most mobile providers will try and tie you into 12- or 18-month contracts, you can usually start negotiating a new contract around two months before your current one comes to an end.

Steve Weller of price comparison site Uswitch.com, says that while you're likely to get the best deals by switching to another provider, it is always worth putting some pressure on your existing network to see what you can squeeze out of them.

Barnes agrees, suggesting that customers ask their phone provider for their PAC code – the number you need to switch networks and keep your existing number. One mention of this should see you put through to the customer retentions department, whose job it is to try and keep your custom by offering you a better deal. "If you're happy with the handset you've got, you may be able to get them to offer you double the amount of minutes for the same price, or give you a credit of, say, £100 on your bill," he says.

Weller says that the more valuable a customer you are – ie the more you spend each month – the more your network will fight to keep you, by offering you big discounts.

Shopping around

If you've got the time and the inclination, you should shop around – even after you've got an idea what your own network will offer you to stay with them.

Comparison sites such as uswitch.com, moneysupermarket.com and onecompare.com are a good way of getting an idea of the best offers out there – especially if you are after a specific new phone. These sites will find you the best contracts for your specific needs, and can also help you find the best free gifts and cashback deals.

However, Weller warns that customers should be careful about chasing cashback offers, as many of the brokers that purport to offer such deals have a very bad record at paying out.

Three months ago, Ofgem, the telecoms regulator, revealed that they had been receiving hundreds of complaints a month from consumers who had not received the money they were promised. Which?, the consumers' association, has even called for such schemes to be banned. In many cases, consumers have to jump through a number of hoops to get their money.

"If you go through the brokers, it's worth checking who owns them," advises Weller. "If they're a small unknown, you're better off steering clear. If a deal sounds too good to be true, it probably is."

Barnes agrees: "It's difficult to get your money, even with names such as Carphone Warehouse. You're better off looking for the free gift deals, as the brokers tend to be better at dispatching these promptly. If you get a free Nintendo Wii, and don't want it, you can always sell it on eBay for around £150."

Both Weller and Barnes believe it's better to buy direct from one of the networks. While you may not get a flashy free gift or cashback, you could get a valuable credit on your bill, which could save you having to pay anything to your provider for several months.

If you do decide to go ahead and switch, the good news is that it shouldn't be as hard as you might think. Mobile providers are obliged to switch your old number over to your new network within five days and many do it much quicker. In the meantime, you'll get a temporary number so that you're not left without a phone.

Other useful tips

If you're going to be using your phone outside of the EU regularly, or are likely to use the web on your phone, Barnes says it's worth buying an additional bundle or two, to tack on to your regular tariff.

While there are now maximum tariffs for using your phone in the EU, which make it slightly more reasonable, it can still be very costly to make calls outside of Europe. However, all providers offer international call bundles for a few pounds a month, which greatly reduce these prices. Similarly, all providers offer data bundles for users who want to surf the internet from their phones.

Weller says that it's also a good idea to look at what other services you can get from your mobile provider, as these may be discounted for mobile customers. For example, O2 offers cheaper broadband rates for its mobile customers, while Virgin Mobile offers cheaper rates for those who sign up to Virgin Media's TV, broadband or home phone services.

You should also think twice before signing up to expensive insurance policies, adds Webber. Many mobile providers will offer you free cover for a few months, hoping that you forget to cancel the policy once you start getting charged for it. However, many of these policies have strenuous terms and conditions and may not pay out for loss or accidental damage. Furthermore, you may find that you are already covered on your home insurance policy.

Before you decide on an iPhone...

Unfortunately, if you're hellbent on having one of the new Apple iPhones, you're not left with much choice other than to pay the full price. Apple has an exclusive contract with O2 – and while the monthly tariffs are competitive, starting at as little as £35 a month, the handset itself will cost you £269 for the 8Gb version, and £329 for the 16Gb model.

Although you can buy the iPhone from Carphone Warehouse, as well as direct from O2, you won't get any discounts, no matter how valuable a customer you think you might be.

The cheapest O2 iPhone tariff is £35 a month and includes 600 free minutes to any network, and 500 free texts. This includes unlimited internet usage too. Moving up the scale, there are packages at £45 (1,200 minutes and 500 texts) and £75 (3,000 minutes and 500 texts).

Although you can pick up an iPhone for much less in the US – around £200 (8Gb) or £250 (16Gb) – these are locked so that they won't work in the UK. You may be able to find a phone specialist who can unlock it, but it's unlikely you'll have the full functionality that you would if you'd bought it from O2 or Carphone Warehouse.

For more information about the phone, visit www.apple.com/iphone or www.o2.co.uk/iphone.