O2 customers can now swap smartphones mid-contract

O2 has announced a new approach to smartphone contracts, enabling customers to easily swap their current phone for a newer, more desirable model while they are still under contract.

Dubbed O2 Refresh and running over the standard 24-month term, the new contracts separate the cost of the handset from the price customers pay for their monthly allowances.

The shift means that consumers can choose what they pay upfront for their handset and then pay off the remaining balance on their handset-only contract if a new smartphone catches their eye.

Conversely, the airtime part of the contract can be cancelled at any time, with no obligation to pay the remainder.

Ernest Doku, telecoms expert at uSwitch.com, said: "The speed and frequency of new devices launching means that many consumers are finding it increasingly frustrating staying committed to one device for the duration of a two-year contract.

“Tech-loving O2 customers will now have the freedom to get their hands on the latest devices as soon as they hit the shelves thanks to the innovative way they will pay for their handset and airtime separately.“

He added: “However the sting in the tail is that people could end up paying over the odds for devices. Consumers can get hold of a HTC One for £489.95, but opting for O2 Refresh would see them having to part with almost £530 in total for the phone.

“Those who can afford a handset upfront could be better off buying the device and opting for one of the great SIM-only deals available.”

O2’s move comes as more and more phone-makers refresh their flagship phones annually, as well as the boom in upgrade culture among mass-market consumers.