Charity warning on telephone contracts

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. In 2007 the debt advice helpline took 5,830 calls from people with telephone debts - representing 3.9 per cent of all calls, but last year that figure had ballooned to 14,651 - representing 7.4 per cent of all calls. In the first three months of this year the problem has further accelerated, as the service has received over 4,000 calls for help with telephone debts. The charity pin pointed expensive smart phone contracts as a potential cause of the problem.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said: "Smart phones have had a massive impact on society in the last few years, but one often overlooked consequence is that we're all paying far more for mobile phone contracts than we were five years ago. This in turn means more people struggling to meet phone contract payments, and finding themselves with a debt problem. 

"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. The figures from National Debtline suggest this is happening more often in line with more and more people taking out expensive smart phone contracts.

"Fortunately there are options available to those who are struggling. 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 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."