The Ultimate Guide To UK's Cheapest Apple iPhone 3G

We're on a mission to find out the cheapest Apple's iPhone 3G in UK, both as a stand alone PAYG model and on a contract, available legally across the country and without resorting to any dodgy business and before Christmas.

O2 currently offers the iPhone 3G on a PAYG tariff starting from £342.50 which gives you a 8GB phone with either unlimited text when you top up £30 or unlimited free UK minutes to O2 and standard UK landlines. Both come with 12 months unlimited data and WiFi access.

The same deal is available from Carphone Warehouse but with the option of taking much smaller £10 top up. It is actually cheaper than having to buy it from Computer Exchange or Ebay where prices are nearer to £380.

Use Quidco's Cashback scheme to get a whopping £45 for the iPhone Monthly contract from either Carphone Warehouse or O2. Quidco will also pay, albeit less, for PAYG contracts. You could also use Moneysavingexpert's technique which uses a well known loophole in Apple's contract that allows you, essentially, to downgrade your contract half way to a cheaper one.

It reads as follows : "5.15 If you are a Consumer Customer who has selected a tariff with a Minimum Period, you may not move to a tariff which offers a lower rate monthly subscription for the first nine months of your Minimum Period. After nine months, you may only move down one tariff per month, to the next lower-priced tariff unless you pay us the difference between the monthly subscription on your original tariff and the lower rate tariff we agree that you may move to. Where you have notified us you wish to move to the next lower tariff, unless we advise you otherwise, your new tariff will commence at the start of your next billing cycle."

On a £45 contract, you get the iPhone for free while you have to fork out £96.89 if you go for the lesser £35 per month contract. Get a £45 contract then after 8 months downgrade to the £35 one. Obviously, this only works out well if you plan to use at most 600 minutes and 500 texts.

Unsurprisingly, as one can guess, getting the iPhone 3G for cheap is not easy. But you can get slightly creative by using for example O2's customer tariffs for its home broadband which essentially gives you a £5 discount per month when you use their landline broadband internet and even more when you use both landline and mobile internet.

Our final assessment; the cheapest PAYG iPhone you can get is £342.49 at CPW with £10 minimum monthly topup. The cost of using it for 18 months is a whopping £582.49. You have to bear in mind that free data and WiFi is only for the first 12 months after which it rockets to £10.

The cheapest contract for the 8GB iPhone 3G is £30 per month (£596.89 for the 18-month duration of the contract, less Quidco cashback). You only get 75 mins and 125 texts.

Using the Loophole Method, the cost of owning an iPhone will cost you £680 over a period of 18 months (less Quidco), which is £4.61 extra compared to the cheapest tariff (you get 1200 minutes for the first nine months and 600 minutes for the remaining period plus 500 texts) at £37.78 per month.

As a footnote, if you plan to use your iPhone mainly for playing video or music, surfing the web or for making international calls AND if you're most likely to be near a WiFi hotspot, then why not give it up altogether and go for an iPod Touch instead. Argos is selling the iPod touch for as little as £161.92.

Grab Truphone's free VoIP application combined with the Cloud's unlimited WiFI access which costs only £47.88 per annum and you have a quasi-iPhone. Truphone prices start from 3p a minute for a US landline call or mobile.

UK prices vary from 3p for landlines to 15p for mobiles and 10p for SMS. True, you won't get any 3G connectivity, but if you can live with that, you've got yourself a bargain. Oh and it is likely that Skype releases an iPhone/iPod touch sooner than some may think.