Around 10 million BT customers are facing above-inflation price increases from 3 July, with the cost of line rental rising by £1/month, some broadband packages increasing by up to 15% and BT Sport up 20%. But if you act now, it's possible to beat the hikes.

The telecoms giant is starting to write to customers today to notify them of the hike, BT's third major price increase in 18 months, following rises in December 2014 and September 2015. The cost of line rental, calls, broadband and BT Sport will all be affected.

Price increases will differ depending on what BT services you've signed up to, but some with standard line rental, fibre and unlimited calls could see their bills rise by as much as £4.55/month (£54.60/year).

Update Monday 9 May: Since publishing this article we've received a number of success stories from MoneySavers who've managed to haggle their way to a better deal – some of which are included below.

How prices will change from 3 July 2016

Before we get on to how to beat the hikes, here's exactly what's happening:

  • Standard line rental – rising from £17.99/month to £18.99/month. The cost of the 'line rental saver' (where you pay for a year upfront) will rise from £194.28 to £205.08. The cost of BT Basic (the phone service for low-income customers) will remain unchanged at £5.10/month.
  • Call costs – set-up fees for landline calls are rising from 17.07p to 19p and the per-minute rate for calls to UK landlines and 0870 numbers is rising from 10.24p/min to 11p/min.
  • Unlimited anytime landline calls package – rising from £7.95/month to £8.50/month, though you'll now get calls to BT Mobile users included within the package.
  • Standard broadband – rising from £13/month to £15/month (a 15.4% increase). Unlimited broadband (on copper wiring) is rising from £18/month to £20/month.
  • Fibre broadband – Infinity 1 (25GB/month max usage) is going up from £20/month to £21/month. Unlimited Infinity 1 will rise from £23/month to £26/month. Unlimited Infinity 2 will go up from £30/month to £32.50/month. BT says customers who signed up to broadband promotional deals won't see broadband prices go up.
  • BT Sport – this remains free for those with BT TV – otherwise if you're on BT broadband, the cost is rising from £5/month to £6/month (a 20% increase). If you get BT Sport on Sky (and don't have BT broadband) the cost is increasing from £19.99/month to £21.99/month (a 10% increase). The BT Sport HD bolt-on is increasing from £4/month to £5/month (a 25% increase).

How to beat the hikes 1 – escape your contract penalty-free

The good news is, you CAN escape your contract penalty-free.

Under regulator Ofcom's rules, those who've taken out a line rental, broadband or mobile contract from 23 January 2014 onwards can cancel their contract penalty-free if a provider ups its monthly prices mid-term and it didn't warn you about the rise when you bought the contract. And in fact, BT says it'll let you cancel penalty-free regardless of when you signed up.

To ensure you can leave penalty-free, you must let BT know you're leaving within 30 days of it giving you official notification of the price rises (which should arrive in the form of a letter). If you want to switch to another provider, you'll then have a 14-day notice period. If you just want to leave without switching to a new provider, your notice period will be 30 days.

If you've paid upfront for a BT package, eg, if you've bought the line rental saver package, you won't be able to get a refund for the rest of the year though.

If you're looking to switch from BT, see our Cheap Home Phones, Cheap Broadband and Digital TV Deals guides for best buys. Current top-pick phone and broadband deals include:

How to beat the hikes 2 – haggle, haggle, haggle

Alternatively, if you're willing to stick with BT, this is a major chance to haggle a much better deal – especially as you'll have the right to leave penalty-free if they don't give you one.

See our Haggle with BT guide for detailed tips, but for starters here are a few...

  • Benchmark the best deal elsewhere so you ask for a realistic discount.
  • Get through to the retentions (sometimes called disconnections) department. They have the most power to slash costs, as their job is to keep you.
  • Use charm and be friendly. Aggression or anger will just put their back up.
  • Don't panic if they call your bluff and say they'll disconnect you.
  • Problems mean discounts, so if you've had issues with BT in the past – eg, slow broadband – politely tell it when you haggle.
  • You may find that your BT customer service rep will only offer a small discount at first, but if you don't agree with the price use phrases like: "I've worked out my budget, and my absolute max is £[insert price here]/month"; "[Talk Talk/Sky/Virgin] can do it for less"; "I need to think about it".
  • You should never go with the first offer. Chances are, it's not the best deal they can do. Remember, be firm.
  • The salesperson may push you to agree because it's a 'limited-time offer' – don't feel pressured into agreeing to the new price or deal unless you're certain.
  • If they won't slash the price, see if they can include any extras, such as free calls or a boosted TV package that includes BT Sport.
  • Vote with your feet. If you don't get what you want you should seriously consider leaving.

Update Monday 9 May: Some MoneySavers have already managed to bag themselves a cheaper deal using our tips, for example:

Tim tweets: "Thank you for the BT advice. Just sorted half price for 12 months, plus some free HD #boom."

Sharon tweets: "Took your advice and just haggled BT broadband down from £33/mth to £11/mth. Thank you."

Campbell comments: "I took your advice and phoned BT about the price rises, stating I had been a loyal customer since the 1990s. I had a figure in my head I thought would be acceptable to me - that was £50/mth but did not tell them that figure - at the moment we are paying £76/mth for all calls, broadband and BT Sport.

"After a while the very nice girl at BT came back with a figure of £49.49/mth all in, that is a saving of £26.51/mth or £318.12/yr, making us a very happy family."

Tricia tweets: "[Darling husband] just haggled with BT (phone and broadband) and Sky TV and got £8 and £10 off for 12 months #result."

BT home phone and broadband prices to rise by up to £54/yr – beat the hikes
BT home phone and broadband prices to rise by up to £54/yr – beat the hikes

'Improved service'

It's worth noting that BT is promising improved service for those who stick with it. If there's a fault with your phone line or broadband connection and a home visit's needed, BT's promising it'll send an engineer within 24 hours of you reporting the fault (this was previously 48 hours). In addition:

  • Anyone with a 38 Mbps BT broadband connection – more than a million users in total – will benefit from a free speed boost to 52 Mbps.
  • Over a million will also get a free usage allowance upgrade to either unlimited usage or a higher allowance.
  • BT Net Protect, which helps protect you from viruses and spyware and was previously included free with BT's pricier broadband packages, will now be given free to all broadband customers.

BT says some customers will get the speed boost, usage allowance upgrade and security software, others will get the security software and either the speed boost or the usage allowance upgrade, and some will just get the security software.

What does BT say?

John Petter, chief executive of BT Consumer, says: "We realise that customers never welcome price rises, but we have again ensured that low-income customers avoid increases. And we continue to highlight money-saving options for all customers.

"We have also done our best to ensure that all of our customers will get more value if their price is going up, and we know they want faster speeds and better online security from their broadband."

Have other providers hiked prices recently too?

BT is far from alone in raising prices:

If you were affected by these hikes it's worth seeing if you can haggle too – see our How to Haggle guide for more info.