Had an email to say they are changing their tariffs around and because 'most' users didn't use their limits they are reorganising them.

Looks like they want me to go on the 3Gb data useage plan, which is a bit of a letdown coinciding that I love to listen to lots of internet radio to and from work. I am guessing the real reason behind this could be the the change to o2, maybe they didn't want customers to have unlimited data on there (could be why GiffGaff also have ditched their unlimited plan in favour for always on)

Not really happy to be honest as I don't have the best credit rating so limited to 3Gb or poor allowances/expensive PAYG plans.

If you're not particularly bothered about networks, you could try moving to Virgin as they still do the unlimited everything plan (albeit with the FUP). I've also got a pretty poor credit rating but they let me join them a few years ago so might be worth a try.

Do Virgin allow tethering ?

The max I could see was an 8Gb plan

Isn't Virgin's "unlimited" plan (only available by calling them AFAIK) a FUP of 6GB anyway?

No.
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