Have you paid for your mobile phone twice?

One in four people have paid too much for their mobile phone - and some of them have overpaid by hundreds of pounds. This isn't due to any failure to shop around - because many of those who overpay looked long and hard for the cheapest deal. They were just caught out by how their contract works.

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The problem, according to uSwitch.com, is that almost half of all people with a mobile phone (44%) have the cost of the phone bundled in with their mobile phone contract. This actually rises to 55% of people between the ages of 18 and 34.

It's a useful way to spread the cost if we can't stretch to buying the handset outright. The problem kicks in at the end of the minimum contract period. By this point, the contract is designed to have paid for the mobile entirely.

Unfortunately, almost a third of pay monthly customers have no idea when their current contract is up for renewal. And when uSwitch.com spoke to them, 27% of those aged 18-34 were pretty confident that their contract had already expired. In fact, the average time since mobile users' contracts expired is six months. Older people were the most likely to be caught out, and 16% of users over the age of 55 have been languishing on the same pay monthly deals for more than three years.

It means they continue paying full whack for their contract - including the portion which is designed to pay for the handset - despite the fact that they have paid for the handset in full already.

Ernest Doku, telecoms expert at uSwitch.com, says some networks will tell you when you have paid for your handset. He explains: "Some networks such as O2 and Tesco Mobile split bills separately: one for tariff and one for handset. This means handset bills can be reduced accordingly, giving peace of mind to the consumer." However, he warns that this doesn't mean customers can be complacent. He explains: "This type of premium contract has a sting in the tail for those happy to hang onto their handset that bit longer. Paying 'Refresh' rates just for airtime and data instead of swapping to a straightforward SIMO and teaming it with your handset means you'll likely be paying over the odds for that airtime and data.

What can you do?

We all need to check when our contract expires. This is fairly straightforward if you have the original paperwork, or you can call your provider and get them to check.

Once it expires, you have a few options. If you are happy with your phone, you can switch to a SIM only contract, which is usually a much cheaper alternative. It's also worth checking the wider market for the price of a SIM-only deal, as you can have your handset unlocked, transfer your number, and get a deal offering a good chunk of time and data for under £10.

Alternatively, you can choose a new phone. Your provider may upgrade you to the phone you want, so you continue paying the same amount but start the clock on a new contract. However, it's always worth checking the wider market so see if there's something cheaper available.

Part of this search should also include a comparison between different ways of affording a new handset. If you can spare the cash to buy the phone up-front, you will get a much better deal overall. Even if you have to borrow the money, if you are disciplined about borrowing, Doku suggests: "Buying a phone outright on an interest free credit card, and paying off the handset before the APR goes up, could be an alternative."