Warning if renewing or signing a new deal with BT or EE – they're planning inflation-busting price hikes

Update 8 October 2020: We initially wrote this story about BT and EE back in September, however Plusnet - which is part of the BT Group - is implementing similar changes. Price rises on Plusnet contracts taken out from 7 October 2020 will be calculated as CPI + 3.9%, and this rise will take effect on or after 1 June 2021, and then on or after 1 March every year from March 2022. 

EE is now part of the BT Group, which is why this change in policy affects both BT and EE customers. Those who renew or sign up to a new contract from 1 September 2020 onwards will see their monthly bills jump in March by significantly more than the rate of inflation.

For full help finding the best broadband, phone line and TV packages, see our free Broadband Unbundled tool. And for help finding the best mobile deal, see our Best Sim-only Deals and Cheap Mobile Tips.

How are BT and EE prices changing?

Here's a quick summary of what's happening:

• Those taking out a new BT or EE deal from 1 September 2020 onwards are locked into the price rise. Prices won't actually increase until 31 March 2021 though.

• Those who haven't renewed recently AREN'T affected – but many may be able to save anyway. If your BT or EE contract started before 1 September 2020 and you haven't renewed, you'll remain on your old terms so won't be hit by this hike. However, you may be overpaying if the deal you initially signed up to has elapsed – see out of contract help below.

• Prices will rise by inflation plus a further 3.9%. The increase is based on the previous December's Consumer Prices Index (CPI) measure of inflation - announced in January 2021. We obviously don't know what that figure will be yet – but if, for example, it was 1.5%, bills would rise by 5.4% in March.

  That means if, for example, you currently pay £40/month, your new bill after the hike would be £42.16/mth – so you would end up paying almost £26 more over a year.

• The rise applies to nearly all BT and EE prices. Broadband, landline, TV and mobile customers are all affected, and it also affects BT Sport customers and some other optional add-ons and other charges too, such as out-of-allowance calls.

  There is the odd exception though. For example, BT told us BT Basic customers won't be affected as they are "financially vulnerable". We've asked for a full list of exactly what is and isn't subject to the price rise, and will update this story when we hear back.

BT broadband and landline customers enjoyed a year without any price rises in 2019, after being stung with two rounds of hikes in 2018. The firm then changed its terms to give annual inflationary price rises to many of its customers from March 2020.

Signed up since 1 September 2020? You're stuck with the price rise

If you've renewed or signed a new BT or EE contract since 1 September 2020, or sign a contract in future, you WON'T be able to leave penalty-free if you're unhappy with this price hike and are still within your contract's minimum term when it hits.

That's because the price rise is written into BT and EE's terms and conditions, ie, you were warned about it when you signed up and so under Ofcom rules you can't just up and leave.

If you're unhappy with the price rise anyway, you can make sure you note down when your contract's due to end, and start looking for new deals as soon as it's up – in fact, this is a good thing to do anyway, as when your minimum term's up it's sensible to look for a cheaper deal elsewhere or, if you want to stay, haggle with your existing provider. However, bear in mind many telecoms providers regularly raise prices, so the key thing is to compare what you pay with deals offered by rival firms.

Should you renew or sign up to a new deal? Remember, a good price now is still a good price

While being asked to pay more is always annoying, most telecoms firms regularly hike prices – so this news does't mean you should rule out renewing or signing a new contract with BT or EE. But it's important to factor it in to your decision.

On the plus side, having the price rise written into the contract means you can plan ahead. The downside is you're committed to the price rise as you've agreed to it in advance – whereas often when telecoms firms hike prices, you can leave penalty-free if unhappy (though it depends on the contract and type of service).

Any firm could raise prices, and unfortunately we don't have a crystal ball to say which will – we also don't know for sure how much BT's prices will rise by as it's dependant on inflation, so it's impossible to predict how prices may change. The important thing is to check that you're getting a good deal now – and if you've found one with BT or EE, don't be put off by this. A good price now is still a good price, even if it'll go up a little next March.

Finally, if you're an existing BT or EE customer and outside of your minimum contract term, you won't be affected by this price rise until you renew – but there's a good chance you can save now by switching to a better deal or getting a new cheap deal with BT or EE, so always check. You can compare prices with other providers using our free Broadband Unbundled tool. For mobiles, see our Best Sim-only Deals and Cheap Mobile Tips.

If you are willing to stick with BT, this may also be an opportunity to haggle a better deal – price rises are always useful haggling ammunition. See our Haggle with BT guide for detailed tips.

What does BT say?

A BT spokesperson said: "While we recognise that no one likes to see their prices go up, with the major growth in data usage seen recently, both at home and on the move, we want to continue to invest heavily in our networks, products and services, simplify our packages and policies, and offer greater support and flexibility to those who need it the most.

"That's why we're making some changes to our contract terms, and better reflect the fairness commitments laid out by Ofcom last year, by bringing all our products and brands in line with a single annual increase, of a known and predictable amount. This is far clearer for our customers and moves away from the unpredictable changes that customers can face today across the industry."