Australians looking to upgrade their phones face the tough choice between spending hundreds, if not thousands, upfront or entering into a lengthy contract that locks them into a single telco.

It’s not an easy choice; the offer of a new device without any upfront costs can be difficult to pass up, but it’s also often more expensive overall than buying a phone outright from a retailer.

Here’s what you need to consider.

Plan or outright?

Phone manufacturers release new devices with the latest features each year, and major telcos are quick to start spruiking deals that save customers the hassle of thousands in upfront costs.

The catch though, as Finder utilities expert Angus Kidman explained, is that they lock you into lengthy contracts that can force you to spend more on calls, texts and data than you need.

“Consider if the potential savings of a contract outweigh the flexibility of buying outright,” he said.

“There is a lot of room to save money without having to compromise how much data and coverage you get.”

It can be significantly cheaper to purchase a device outright from a retailer and then shop around for a better value telco deal – many of which still use the Telstra network and its wide coverage.

The large telcos often charge far more for mobile data than smaller competitors, with research suggesting Australians are paying billions too much for services they don’t fully utilise.

But buying a device outright also comes with a higher upfront cost, and depending on what model you choose that could be several thousand dollars.

Don’t pay for feature bloat

You might not need the best model though.

The smartphone market has come a long way in the past decade and there are now choices aplenty for hundreds, not thousands.

Even Apple’s notoriously pricey ecosystem now has a value product sitting about $720.

So review what features you use on your current phone and whether a cheaper model could do the job just the same, such as whether you really need the best camera or a big memory bank.

“New smartphones can cost over $1000, but you can get great devices for under $500; decide how much you’re realistically comfortable spending,” Kidman said.

“There are fantastic mid-range options that offer excellent performance without the hefty price tag.”

Don’t overpay for data or memory

Two things pretty much everyone needs from a phone are mobile data (internet) and memory (local storage).

Unsurprisingly, these are also the areas Australians also typically overpay for.

Opting for a phone with additional memory can increase the sticker price by hundreds, while locking yourself into a plan with data you’ll never use can add significantly to monthly bills.

So before buying your next device check your existing device for two things: The amount of data stored on the phone locally, and how much mobile data you’re actually using in a typical month.

You can find this information easily through the settings or options menu on any smartphone.

For local storage, ask yourself whether the level you’re currently using works for you, and what degree of buffer room you might want on top of that.

It’s often much less than you anticipate, particularly these days with many Australians storing personal documents and other information on external servers (such as Google Drive).

The same rule applies with data.

You want a plan that matches your usage – preferably with data banking for added flexibility – so if the deal that comes with a phone far exceeds that, beware.