Tag: phone

Phone and broadband providers are set to increase their prices by up to 8.8% in April.

How Price Rises are Calculated

Many broadband and mobile phone providers use the CPI or RPI rates of inflation to calculate their price rises.

The December CPI figure was 4% and the January RPI figure was 4.9%.

Many providers will also increase their prices each year, regardless of inflation, by a set percentage point, usually 3.9%.

 Therefore, your phone bill could go up by 8.8% if your provider raises their price by 3.9% every year, and also adds on a 4.9% increase based on the rate of RPI. Indeed, Virgin Media and O2 are expected to raise prices for mobile-phone customers in the middle of their contracts by up to 8.8% in April.

Ofcom Proposes Ban to Inflation-linked Price Rises

Ofcom stated that 4/10 broadband customers and over ½ of mobile phone customers were on contracts linked to inflation-linked price rises as of April 2023.

They are proposing a ban to inflation-liked price rises and price rises set out in percentage terms in contracts but have not yet published their financial decision.

They are proposing that companies instead set out price rises in customer contracts upfront in pounds and pence, so that customers can clearly see how much their contract will increase by during the contract period.

“With most major phone, broadband and pay TV companies now including mid-contract price rises linked to uncertain future inflation, we are concerned that customers’ contracts do not provide sufficient certainty about the prices they will pay.

So we are proposing to introduce tougher protections for customers by banning this practice” – Ofcom

Consumer Harm

From January to October 2023, Ofcom received over 800 complaints regarding price rises, highlighting just how many customers feel misled about the prices set out in their contracts.

Ofcom notes that consumers lacked understanding about terms like CPI and RPI.

“More than half (55%) of broadband customers and pay monthly mobile customers (58%) do not know what inflation rates such as CPI and RPI measure. And of those who are with providers that use inflation-linked price rises, very few broadband (16%) and mobile customers (12%) were both aware of the price rise and able to identify that it was inflation-linked with an additional percentage.”

They also noted that even those who did consider future inflation-linked price rises when choosing a contract found it difficult to estimate how this could impact their future payments.

It is clear that these inflation-linked price rises are steeped in uncertainty, with customers being misled when entering contracts. Many customers lack the complete financial understanding to realise the terms of their contract, and even those who have an excellent financial understanding are not able to prophesise how much inflation will rise by.

These price rises can make it difficult for customers to manage costs and can lead to consumer harm, as it often means that customers are stuck in contracts paying much more than they thought they would, with no real way of exiting due to high contract fees. More clarity and transparency is needed from phone and broadband providers to help deal with this confusion.

Saving Money on Your Phone

  • If you are happy with your existing device, you may wish to consider switching to a SIM only deal when your contract runs out to reduce your monthly bill
  • Shop around when your contract is close to running out – look into various providers rather than just sticking with the same one. Money Saving Expert notes that many customers who are out of contract have been rolled onto more expensive tariffs (which you are free to leave without exit fees) so make sure you check when your contract runs out, as it might have already happened!
  • When your current contract runs out, you may want to consider buying a new device outright and finding a cheap SIM only deal to pair with it yourself
  • Consider using a reseller for your next contract – resellers buy new handsets in bulk at wholesale prices or buy refurbished models and get them back up to scratch. Therefore, they tend to be able to offer mobile phone deals along with network contracts at more competitive prices

With apps like Go Henry claiming to help children learn how to effectively budget, we have decided to have a run through the benefits and drawbacks of using technology for financial education

 What is the Go Henry App?

The Go Henry App markets itself as an application aimed at increasing children’s financial education. It claims that

“kids learn to budget”

through use of its services. For £2.99 a month, parents can set their children a monthly allowance in the form of a pre-paid debit card

What are the benefits of this?

Parents can set spending limits so that their children have to learn how to budget

Parents can set chores which, when completed, gives their children extra spending money. In a way, this mirrors the “real world”, preparing children to get used to having an income and expenditures

The app allows parents to maintain full parental control yet also gives children the freedom to make their own financial decisions

It is also a good visual way for children to see their money in one place, as the app has a pie chart showing spending habits, so that they understand how they are proportionately spending their money

Go Henry’s spending charts

What are the drawbacks?

Parents can block and unblock cards, and whilst this sounds like a positive, it really just defeats the whole purpose of giving children financial freedom. Parents can also give their children more money through the Go Henry App when they run out. This will only serve to make children accustomed to the idea that there will always be a reserve of money when they run out. Therefore, they may be more likely to use their overdraft when they are older and get their own bank account. This said, the top-up is limited to once a month per child

The card on the app works like a regular debit card so it is difficult to see its usefulness. If it was a free app this would be more understandable, but for £2.99 a month it seems like a bit of a waste of money

There is already a problem with children becoming too reliant on technology. Sometimes it isn’t completely necessary for them to be using it- why use an app when you can just use a debit card? There is something to be said for teaching children how budget with their pocket money in real coins and notes, as it can actually help with their mathematical skills. This said, with almost everything being online now, children will have to become accustomed to things like online banking, so perhaps this is just preparing them for the realities of later life

Why not a hybrid approach?

Perhaps technology should be used in conjunction with financial teaching. This would ensure that children become financially literate, yet also gives them a chance to apply these skills in their spending, with apps like Go Henry. This blended learning is important so that children have personalised instruction and as teachers, we can track their progress and their understanding of financial matters

Red Star has an online course so we are staying up to date with the latest technologies. We also have online systems like our Budget Calculator which is useful for those who prefer the techy side of things! However, online apps alone are no match for our in person, expertly led, financial education services which teach children that finances are more than just numbers on a screen