12 Months Free Line Rental

A 12 Months Free Line Rental deal is an incentivised mobile phone contract, whereby the customer can redeem the cost of their mobile phone contract by submitting claims for cash back.

Essentially, a 12 month free deal is nothing more than a cash-back offer, where the amount of cash-back that can be claimed covers 100% of the cost of the contract.

By using a 12 month free line rental deal it is possible to run a mobile phone completely free of charge, that is to say that you can get a free mobile phone with free inclusive calls and text messages.

However, there are several pitfalls with 12 month free line rental deals that can mean you actually end up paying more for your contract than you would have using a more conventional deal.

As with any "scheme" of this kind, the losers subsidise the winners.

This hub page explains how 12 month free deals work, advises potential customers on whether this kind of deal is suitable for them, and makes suggestions on how to save money with these deals, as opposed to losing it!

With a free line rental deal you order and pay for your mobile phone as normal. This means you pay your monthly bill at the full amount as you would with any other contract.

At a later point in time (6 - 9 months into the contract) you are given the opportunity to claim money back from the retailer that sold you the phone.

Many people are (justifiably) sceptical when they see offers for free mobile phones, and wonder why these deals are offered. After all, whre is the profit for the network provider and retailer?

First, as already mentioned it is important to understand that the "free line rental" element is offered by the mobile phone retailer, not the network provider.

The term "free line rental" is actually a little misleading, as, you still have to pay your line rental to the network provider (their income is guaranteed) as normal.

Mobile phone retailers have no influence or control over what the monthly charge levied by the netword providers is. So, the retailers are competing fiercly to sell a product which has a fixed price.

In order to compete on these fixed price products, retailers began by giving away free handsets, then other incentives such as free gifts (usually consumer electronics) and cash back offers.

Effectively, retailers began giving part of their profit back to customers to incentivise their deals. This reduced their profit per deal, but, in theory allowed them to achieve higher sales volumes.

The free line rental deals were spawned from the earlier cashback incentive deals. Some retailers had the idea that they would refund 100% of the cost of the handset back to customers and offer completely cost free mobile contracts as the "ultimate incentive", again, to drive more sales.

If something appears too good to be true, then often it is! Many people therefore want to know what the catch is with free line rental deals, after all, how can a retailer give away a product completely free of charge and still make money? How are retailers making money with these 100% cash back offers?

The answer is simple, they ensure that they do not have to pay100% redemption out 100% of the time.

They engineer the deals in such a way that, although the deals are genuine (legal), a proportion of customers will fail to get their money back.

Customers who fail to make their claim properly may actually end up paying more for their mobile phone than they would otherwise have done, subsidising those that do make a successful claim.

Now we understand how free line rental deals work, and we know that the retailers need to ensure a proportion of customers will fail to make their claim. So, how do they do it? Well, that differs between retailers, but, here are some common methods that have been observed:

1) They set a small window of opportunity for when cash back can be claimed. So, you may be able to claim for only a few days in months 8, 9, 10 and 11.

Many customers forget about making thier claim and miss the deadlines. Some of the less scrupilous retailers actually sate that if you miss any one of these claims you lose all subsequent claims.

2) They stipulate certain documentation must be produced when making the claim. For example, they may provide vouchers which must be redeemed.

Some people will lose these vouchers and with them their ability to claim their cash back.

They may also stipulate monthly bills must be provided, so, if a cusomer accidentaly loses or throws away a bill, then they again forfeit their cash back offer.

In addition to the above section on "Tricks Employed" there is one other significant risk associated with free line rental deals, and that is, what happens if the mobile phone retailer goes bust?

The answer is, more than likely you will lose your money!

If a retailer is declared bankrupt, you 'may' be able to get yourself added to the list of creditors, however, it is very unlikely you will ever get your money.

Remember the deal is solely between yourself and the retailer, so, in the even that the retailer go's bust, do not expect any support from the network provider.

Although retailer bankruptcy is a risk you need to be aware of, it is a small one. Most retailers offering 12 month free line rental deals are reputable and have been in business for many years.

Well, are you organized enough to:

• Keep all documentation

• Keep all monthly bills
• Make an entry in your calendar / diary of relevant dates
• Act on those dates and make your cash back claim meticulously

Furthermore, are you determined enough, do you really want a great deal, or would you rather just pay the money fair and square for your service and avoid the hassle?

If you are both determined and organised, and love a bargain enough to put some effort into it, then you could benefit from a free line rental deal.

If on the other hand you are looking for a free ride (phone) then you shoudl probably forget the idea.

Make no mistake, there is no such thing as a free lunch, nor a free line rental deal! Somewhere out there someone is making a profit, and somewhere else, someone is paying for that profit!

All that said, the deals are genuine, I have used them for some time and know others who also do this successfully.

One final note:

Always Read the Small Print!