Mobile phone giants are stinging loyal customers by charging them up to £46 a month for handsets they have already paid for.
Millions are signed to contracts with a fixed monthly fee that covers repayments on the handset and usage of the phone.
These deals tend to last 24 months. In theory the overall cost should fall sharply after this period as repayments on the handset end.
But Citizens Advice found many networks continue to charge the same monthly fee, even though the handset cost has been covered.
Mobile phone giants are stinging loyal customers by charging them up to £46 a month for handsets they have already paid for
Customers on EE, Vodafone, and Three who stay on the same plan after the fixed deal ends do not get their bills reduced.
As a result, they effectively pay an average of £22 a month more than they should, Citizens Advice said.
The extra cost can be up to £38 a month for contracts with top handsets such as the iPhone 7 128/256GB, the Galaxy S8 and the Xperia XZ Premium.
Some customers who take out a deal for the iPhone 8 256GB could effectively be paying £46 a month extra.
Generally, the best value option at the end of a 24-month contract is to transfer to a SIM-only deal with a firm such as Giffgaff. But many customers are unaware of this.
Citizens Advice is calling on the Government and telecoms regulator Ofcom to make mobile networks provide more detailed information on their charges.
It said the monthly fee should be in two parts, one covering handset repayments and a second for usage – and the monthly charge should fall automatically when a handset is paid off.
Spokesman Gillian Guy said: ‘Some of the largest mobile phone providers are routinely overcharging … the way that the cost of handsets are hidden within some mobile phone contracts gives phone providers a way to exploit their customers.’
Citizens Advice found 36 per cent of those with a handset contract stayed on the same monthly charge at the end of a fixed deal. Around one in five stayed for more than six months. Some 23 per cent of over-65s stayed for at least 12 months.
Miss Guy said: ‘It is clearly unfair that some phone providers are charging loyal customers for handsets that they have already paid for. It’s especially concerning that older customers are more likely to be stung by this sharp practice.’
EE said: ‘We send our customers regular updates about their options before and after the end of their contract … [They] can move to a SIM-only plan as early as 45 days before the end of their contract.’
Vodafone said: ‘Wherever possible, we contact customers nearing the end of their contract to offer them a range of options.’
Three said: ‘We make the end-date of the contract term very clear. We also let them know that they can contact us at any time to discuss the range of options available.’
O2, which already separates usage and device costs, said it would like to see other firms ‘follow our lead’.