Charity Citizens Advice are advising all those with mobile phones and a “bundled” contract for handset, data and call charges to check whether or not their minimum contract period has expired.

The warning comes after the charity discovered that millions of customers were still paying out for a handset they already owned, an average of £22 a month, after the minimum contract period, which covers the cost of the handset, had expired. The charity estimates that nearly £500 million has been paid to mobile phone companies in this way and has named Vodaphone, EE and Three as beneficiaries.

The charity found that in 75% of cases it would have been cheaper for the customer to buy the handset separately from other charges. Watchdog Ofcom wants to require mobile phone companies to tell their customers when they are nearing the end of their contract term.