Dump your phone and save £160 a year

BT customers beware - you may be about to start paying a whole lot more for your landline telephone calls. As Ruth Jackson explains, there are a number of ways to get a much better deal.

If you are a BT customer, you have probably seen your phone bill rise steadily over the past year. The company has employed a variety of tricks to wring more money out of its customers, partly in order to plug its £7.5bn pension hole.

The bad news is, they're at it again. The good news is that you can do something about it.

What is BT up to?

The phone company is putting up line rental. From October, line rental will cost £13.29 a month that's a 50p increase.

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But that's not all. Call costs are also going up with the price of connecting (outside of a package deal) rising by 10% to 10.9p. Daytime rates are also going up from 5.9p to 6.4p a minute it cost 5.4p a minute just four months ago.

The announcement comes just three months after BT significantly upped most people's bills by moving the point at which free evening calls start from 6pm to 7pm. That move meant that anyone who makes 20 minutes of calls each day between 6pm and 7pm could have seen their quarterly bills rise by as much as £80, says Ali Hussain in The Sunday Times.

That's a lot of price hikes in a short space of time. It seems BT are happy to keep nudging up prices bit by bit until customers start squealing.

Should you rush to switch?

The good news is you don't necessarily have to switch providers in order to get a better deal. BTis offering a discount to any customer who signs up for a 12-month line rental contract before November, and pay the year's line rental up front. If you can do that, then you'll pay £113.88 for the year (the equivalent of £9.49 a month). That gives you free calls to other landlines and 0845/0870 numbers in the evenings and at weekends.

And for a further £4.99 a month you get those free calls extended to all day everyday. So that's a total of £14.48 a month. That's not bad. But for a bit of extra effort you can get a cheaper deal elsewhere.

To find the best phone deals available in your area, check Homephonechoices (www.homephonechoices.co.uk). One of the cheapest deals is Primus Saver's Home Phone Max which would cost me £13.88 per month for unlimited anytime calls to landlines.

It's a bit of an improvement, but still not hugely different to the BT price. That's because the other landline providers tend to follow BT's lead, so they only ever marginally undercut the competition. So is it time to give up on landlines altogether?

Save yourself £160 a year

Most of us now have a mobile phone. And yet we continue to pay for a landline on top. If you have a good deal on your mobile, then the chances are you barely use the home phone'. So why fork out £160 a year in line rental? If you can survive without it which most of us can consider dumping your home phone.

Bundle, bundle, bundle

But if you can't bear to part with the landline, the best way to significantly cut your bills is to bundle. Here you get your internet and phone from the same provider. Or you can bundle your internet, phone and television service. This can cut your costs by up to £200 a year, according to Moneysupermarket.com.

If you combine your internet and phone, the best deal is with Orange, who charge £10.50 for the first three months then £17 a month. If you paid separately you would pay around £24 a month. For those who also have paid-TV services, you could bundle all three and pay £29.50 with BT.

To find the best bundled deals in your area, check Homephonechoices.co.uk.

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Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings and credit cards to pensions, property and pet insurance. 

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping among many other titles both online and offline.