Martin Lewis tells 14 million people they are being 'ripped off' on fixed costs

Millions of people across the country might be paying £50 every month that they do not have to and not realising it, due to a quirk of mobile phone and broadband contracts. But, Martin Lewis has advice for savvy consumers that could see them cut their monthly phone bill to just £8.

The founder of the Money Saving Expert website has warned 14 million people that they could cut around £100 per month off their fixed costs, if they know how to get the best deal on their phone and broadband contracts. With many phone customers facing mid-contract price hikes of eight per cent, Martin Lewis has said there is no silver lining for consumers, but millions who are out of contract could slash this cost.

Mr Lewis said in his weekly email: "Broadband and mobile firms usually write into their contracts that they'll increase the cost each April, by usually 3 per cent, ABOVE inflation. This is bad for consumers. It feels unfair, as rises are fixed so can't directly link to costs, and it's by definition inflationary (ie, above inflation rises increase inflation, meaning bigger rises each year - a vicious circle)."

READ MORE: Broadband giant urged to improve 'rock bottom' service after price hike

This method of raising prices has drawn fire from Martin Lewis, Which? and Citizens Advice in the past, something the Money Saving Expert founder has raised with Chancellor Jeremy Hunt, but has yet to see progress on. Market regulator Ofcom is understood to be investigating a "pounds and pence" approach, where rises could be calculated off exact figures, rather than an inflation-causing percentage.

How to cut your phone bill and save hundreds

When people sign up for a phone contract, frequently they will pay a large monthly fee to pay off the cost of their handsets. However, millions of people are overpaying this contract after the cost of their mobile phone has been paid off.

Getting a SIM-only deal can massively cut this fixed monthly cost, saving some savvy shoppers well over £500 a year on their phone bill.

On his podcast, Martin Lewis explained: "Check if you are one of 14 million people out of contract and are free to switch. To switch text 'info' for free to 85075, it is an Ofcom-regulated scheme that firms must comply with, telling you if you are out of contract.

"A few firms will then say they want your birthday to validate you, that is cool, that is part of it, that is fine. My rule of thumb - If they say they cannot give you this information, if you have not done anything with your mobile phone for a couple of years, you're almost certainly free to switch."

The only phone contract holders this method would not work for are those with contracts for multiple handsets, which could make it difficult to switch to a lower tariff.

Once you have figured out that you are free to switch, you can get a SIM-only deal that will likely have more mobile data attached to it than your contract.

Mr Lewis went on to say: "Second step, out of contract, if you are paying over roughly £8 a month... you can get a 100gb a month SIM for £8 a month, factoring in all the promo vouchers and everything they give you. Or 50gb for £6 a month. So you need to look at 'can I do it much much quicker and cheaper and easier'.

"The easy way to do that is get yourself on a comparison site. The best deals tend to be short-lived promos on comparison sites, not available direct because this is where the companies can put their marketing spend into giving you a £50 Amazon voucher

"If you're paying £10 a month and get a £50 Amazon voucher, if you factor that in as cash over a year, suddenly that brings down the respective cost quite substantially."

If you want to keep your phone signal, there are only four network providers in the UK, so you can check an online phone signal tool to see which other providers could work in your area.

How to cut your broadband bill and save hundreds

Unless you are using your broadband for loads of devices and they are all streaming HD video or downloading files, you probably do not need hyperspeed broadband.

On the Martin Lewis Podcast, he said: "Unfortunately, there is no easy 'am I out of contract' route, so it just depends on how long you have had the relationship with the broadband provider.

"Easy rule of thumb, if you are paying more than £30 per month and you're out of contract, you can probably save - and most people are paying £40 or £60 a month. The only exception would be if you are one of those people that needs hyperspeed to your house, then you may need to pay more."

One Money Saving Expert follower, Mikey, said he had saved £576 a year through switching from his usual internet provider.

Mr Lewis said: "It's all about short-lived promos, they normally last one or two days, they are on comparison sites, companies want to win a bit of business, they are willing to pay for the business, what they do is keep the tariff the same but they provide marketing incentives like Amazon vouchers out of their marketing budgets to try and get you."