Make the right call on mobile phone 'freebies'

Customers are offered anything from laptops to games consoles with their contracts, but they're not always a good deal. Chiara Cavaglieri reports

These days, a mobile phone is a necessity rather than a luxury, and with fierce competition there are great deals to be had. But the networks are constantly finding ways to lock us into long contracts.

Getting a free laptop or computer console with your phone may be enticing and we all like something for nothing, but do these offers really save you money?

"Mobile companies have always enticed new customers with so-called 'freebies' such as laptops, flat-screen TVs or even iPads and iPods – but of course there is always a catch!" says Dominic Baliszewski from Mobilechoices.co.uk.

First of all, the vast majority of free gift deals are offered by online retailers, not the actual networks themselves. Many of these are reserved for older phones or less generous contracts, so you must always compare the cost of buying the free gift and mobile contract separately.

Take the BlackBerry Bold 9900, for example; you can pocket a free Hewlett Packard laptop with O2, a Nintendo Wii with Orange, an Apple iPod Shuffle from 3 Mobile and a Nintendo 3DS from Vodafone, according to Mobilechoices.co.uk. All enticing freebies no doubt, but with a closer look they aren't quite as exciting as they seem.

Firstly, all of these deals require you to sign up for two years. They also charge over the odds each month so that the cost of the "freebies" is priced into the monthly tariff. With O2 you could bag a free Hewlett Packard Pavilion G6 laptop with unlimited texts and minutes at £57 per month, totalling £684 for the total first-year cost. However, Mobilechoices says you could get the same deal for £51 per month, with seven months' free line rental, bringing the first-year cost to £255. Even with the cost of the laptop taken into account, which is upwards of £350, it is cheaper to steer clear of the freebie and buy it separately.

"To gauge value for money, look at the whole package carefully and compare the minutes, texts and data allowance on the contract to a similar deal without a free gift," says Ernest Doku, a tech expert at uSwitch.com.

Cashback offers can be just as tempting as freebies, but tread carefully as there may be strict terms and conditions. You are usually asked to send in various bills (such as your first, fourth and sixth bill) within a tight time frame in order to claim your cash. If you miss one deadline they may not only refuse to pay that month's cash but could also cancel payments for the rest of the contract, leaving you out of pocket.

Despite this, don't immediately dismiss all free gifts – there are good deals to be had from time to time. For example, if you're with Orange and eligible for an upgrade, it is giving away Xbox 360 consoles with preorders for the soon-to-be released Nokia Lumia 800 smartphone before 16 November.

You are still likely to be stuck with a long contract, however, which usually means being locked into an uncompetitive tariff when new and improved deals come along. For complete flexibility a SIM-only tariff is the way forward, offering one-month rolling contracts so you can cancel as and when you want to. You do need to pay for the handset yourself, but if you're not too bothered about having the latest phone, or you have tech-geek friends willing to pass on their rejects, these offer great value.

Virgin and O2 are particularly competitive in this area, with prices starting at £8.99 for 75 minutes and 2,500 texts, up to £25.99 for 800 minutes and 2,500 texts at Virgin and from £10.50 for 100 minutes and unlimited texts, up to £46 for unlimited texts and calls with O2 Simplicity deals.

"Remember, the power is in your hands. Think about what you want from your deal – whether it's the most texts for your money or the greatest flexibility and look for that first," says Jasmine Birtles, the editor of Moneymagpie.com. "The freebies and extras shouldn't come into the equation."

But, no matter whether you opt for a monthly contract, pay-as-you-go or SIM-only deal, always start by getting an idea of your usage. Look at old bills and use sites such as Billmonitor.com to see if your current tariff is too expensive for the amount of minutes and texts you use. If you do find a deal that you like the look of, simply calling up your provider and negotiating a new deal can bring results. Ask to be put through to the customer retentions department where they have leeway to offer top discounts to stop you from leaving the network and don't be afraid to say goodbye if they don't match it.

"If you find a better deal with another provider, be prepared to switch," says Mr Baliszewski. "These days it is easy to switch and keep your number and, if another network is cheaper, well worth it to make a saving."

Expert View

Ernest Doku, uSwitch.com

"Mobile phone retailers are responding to our penchant for a freebie by offering everything from laptops to hair straighteners with monthly contracts. Everyone loves a freebie, but it's likely you'll end up absorbing some of the cost of that 'free' TV or games console in your monthly contract."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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