Monday, June 6, 2011     17:19

Tips on Buying a Mobile Phone

Most of the information here relates not just to simple phones but any mobile phone - what are the pitfalls, how to find the really good deals and more.

Contract Phones

It's when taking out a mobile contract that you really need to know what you're doing, however fear not, it's fairly straightforward. Most people take out a contract with a 'Free' phone, that is you don't pay anything up front. It's not free, of course, you're just paying for it gradually with higher monthly costs or the same monthly cost but on a longer contract. The economics of a contract involve balancing out upfront cost against ongoing cost, which is why we list the deals in order of total cost over the life of the contract.

If you buy from a reseller (Buy Mobile Phones, etc) they receive a commission from the network (O2, Orange etc) for signing you up and they need to construct the best possible deals using that commission and taking into account the cost of the phone. If you buy from a network they are happy to subsidise your handset cost directly as they are ones benefitting from your custom for at least the length of the contract and probably longer.

Automatic and Redemption Cashback

A lot of deals include cashback, either 'automatic' or by 'redemption'. Automatic is easy - a set period of time after you take out the contract you are sent a cheque or a transfer for the sum of money. Redemption is more complicated - you need to send in your mobile phone bill to the retailer at certain points in the contract, for example months 3, 6 and 12. If you do this you are sent a cheque for each stage of the redemption (a £100 redemption might be in 4 lots of £25), however if you forget you don't get it. If you are organised enough to do this it's often a good deal. You will always get more cashback offered by redemption than auto, simply because the cashback offered by redemption will only be partially claimed - even if you do it perfectly there will be many others who fail to keep it up, and that's what the system relies on.

Free and Reduced Line Rental

This is just cashback by redemption by another name - exactly the same applies. It is possible to find deals where as long as you follow the redemption instructions you get the phone itself and the minutes and texts for nothing - absolutely free.

Pay As You Go

Pay As You Go is altogether simpler - you buy the phone with a PAYG SIM card and almost always an amount of credit and you are then free to top up the SIM card as and when you wish. Conditional airtime, or the amount of credit you are obliged to buy with the phone is the only thing to watch for, however it's normally £10 and if you're going to using the phone with the PAYG SIM provided you will need to buy it anyway. Just remember if you see a PAYG phone advertised for £5 you will invariably have to buy £10 of top-up for that network at the same time, so your total will be £15.