Sorry if this is a load of maths, but I have always tried to be thrifty! As I see it, there are several options, all of which expensive, but some considerably more expensive than others. The first option is the most obvious. Pay off your contract and start a new one. The actual real term cost of this is: Pay off your current contract (7x35) = £245 Buy a new 3GS = £184.98 Sell existing iPhone = £200 (minimum I reckon) Total: £229.98 BUT... In July next year, if you've bought the 3GS, you are going to want the new one. So, let's do that sum again for July 2010. £229.98 + £229.98 = £459.96 Now if we add line rental onto this the actual cost is: £1,509 (because you will have 12 months line rental to pay til July 2010 plus the cost of the paying off early fee's and handset prices, then add 18 months line rental that you will be tied to from July 2010) The second option is to get a new 3GS, with a new contract and run the two concurrently, putting your existing sim in the new phone. Although this spreads the cost of paying off early, it's still the same amount of money. The third, which I think is the most cost effective option is buy a PAYG which is: Handset = £440.40. 7 months left on your current contract = £245 £685.40 Once you have paid this £685 you are then free to either switch to PAYG, or go to a simplicity tariff, both of which will make your total cost of ownership drastically cheaper. In addition to this, you won't have to pay an early pay off fees in July next year.