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What would you think if you were offered a free mobile phone for a year or a ₤400 Playstation for just signing up to a 12-month phone contract?

Too good to be true? Well, actually, no. Despite the bad press regarding some ‘free phone contracts’, many of those who have signed up have saved themselves hundreds of pounds a year in mobile phone charges.

Anthony Ball director of independent comparison site OneCompare insists that if customers read the terms and conditions and make sure they claim back their phone bills on time, they should be quids in.

“The 12 month free deals are a bit thin on the ground now but you can still get 10 month and six month deals and you have to remember that you are getting the same phone handset and contracts as you would get normally from a high street store.

"The phone providers make their money in two ways – firstly if they hit volume targets the networks pay them more; secondly, they work on the assumption that many customers will not bother to reclaim their monthly bills.”

It is important to remember that all phone bill refunds are claimed back from the retailer, they are nothing to do with the network. You pay the network your monthly bill as usual then you claim these fees back from the company that provided you with the phone.

But why would someone who signed up to a free phone not claim back their monthly fee. “They like the idea of it when they sign up but then never bother to make the claim,” Ball explains. “I would suggest as many as 50% of phone users fail to claim back their fees.”

Do yourself a favour

Effectively the phone provider works on the assumption that most customers won’t make the effort to reclaim monthly fees. The press has heavily criticised the fact that customers are not sent reminders to reclaim their phone charges but as Ball explains, the terms and conditions are there for all to see.

“There are a few quirks in some of the terms and conditions but nothing that you can’t deal with if you read them carefully. You have a 60 day window to make a claim and to make life even easier, OneCompare will provide a free email reminder service to all our customers who have a phone contract. They will be told when their claim should be sent, it is up to them after that!”

Keep moving

The free phone deals are really only a variation on a theme that credit card providers have been working with for years – card provider offer 0% interest for 12 months and work on the assumption that a large percentage of these new customers will stick with them when their card reverts to the standard rate of interest.

Those that don’t stick around but move to another 0% offer are in the minority – it’s all a numbers game - so the credit card provider is happy. With mobile phones it is similar the customer is also free to switch to another free deal with another provider so long as their previous contract has run its course. But once again most fail to take advantage of the free switch.

“Like 0% credit cards, the onus is on the consumer to make the most of the offer, if they don’t they are no better off.” Ball says. “Press criticism of a few unscrupulous retailers and warnings from telecoms watchdog Ofcom, have meant most 12-month free phone deals have dried up now but there are plenty of six and 10 month deals out there and also some great free gifts such as PS3. Why not take advantage of them?

Philip Tucks from Ely in Cambridgeshire signed up for a free phone over a year ago and he has made considerable savings.

“I can see why people forget to make claims but I do believe that with a little organisation you can make these deals pay. I print out a number of claim forms and post date them, they are ready to send in advance and I make sure they are sent on time.

"I plan to switch to a new phone at the end of this contract and I will be able to keep my existing mobile phone number so there is no inconvenience at all to me. I worked out what I saved on my phone bill paid for a fortnight in the Canary Isles!”