A jargon free explanation of Cashback and how to Redeem it

With lots of mobile phone companies all fighting for your business they all want to offer the lowest price so you pick them over their competitors, they do this by something called “cashback by redemption.”

In its simplest form Cashback by redemption gives you money back (usually in the form of a cheque) throughout your mobile phone agreement. Some companies offer a single cheque for a larger amount whereas others offer multiple cheques throughout your contract period. To receive this money you are asked to send certain bills to the retailer during your contract and then they will send you a cheque.  It is important to note that if you do not send your bill at the correct time you may lose your right to claim your cashback by redemption.

A quickfire Example

Using the example above (27th May 2011 search results), this deal offers reduced line rental via redemption cashback. This means you will pay £25.00 per month, however we list the effective price over the contract term including the cashback which actually works out to £21.35, this provides users a true price comparison. The quick calculation below details how the price falls to £21.35 effective.

  • You pay £25.00 x 24 months = total cost over the 24 month contract is £600.00
  • However during this period you are entitled to claim back £87.50 from the retailer via redemption
  • £600.00 - £87.50 = £512.50 divide by 24 months equals an effective cost of £21.35

Cashback via redemption can also be referred to via different methods, for example "reduced line rental" "discounted line rental" or "X months free", quite often they essentially mean the same, just a different way of selling it to consumers, a discount claiming cashback via redemption.

Cashback via Redemption detailed example:

So lets look at another example*. We’ll look at e2save in this case (an online division of The Carphone Warehouse) however it is worth pointing out that they’re not the only ones who have this process.

Lets say you buy a redemption cashback deal like the Samsung Galaxy S. Its a great offer - you pay a low cost for a period of time, and it looks like you’re getting a deal for just shy of £15.20 per month when it would normally be just over £25.54 per month! You also get a great phone free – bargain you think! Sound too good to be true?

Well its not IF you follow the process…

To get this deal, you in actual fact pay the higher monthly amount (£25.54 per month) and then at certain points of your contract you are required to send your statement to e2save and they’ll send you a cheque for the amount you’re due, thus reducing your overall monthly outlay over the term of the contract if you calculate the cashback received.

Lets take a look at this in more detail using the instalment schedule from the e2save website: Firstly for all of the below instalments you have 60 days from the date on the statement to submit your claim. Send them your claim form and monthly bill showing your name, address, mobile number and tariff you are connected to. (this bill must be no older than 60 days when e2save receive it and have no balance brought forward.)

Here are the raw figures for calculation

  • You physically pay £25.54 a month for the 24 month contract, this totals £612.96
  • But you claim back £49.61 in 5 installments over the 24 month contract, this totals £248.05.
  • £612.96 - £248.05 = £364.91, divide that by 24 months equals your effective monthly payment £15.20.

Instalment 1 - You will need to send the bill dated 6 calendar months from the month that you received your phone.
i.e. If you purchased on the 1st of February 2011, you need to send in a bill that is dated within July 2011. e2save will then send you a cheque for £49.61.

Instalment 2 - You will need to claim by sending the bill dated 9 calendar months from the month that you received your phone. 
i.e. If you purchased on the 1st of February 2011, you need to send in a bill that is dated within October 2011, e2save will then send you a cheque for £49.61

Instalment 3 - You will need to claim by sending the bill dated 12 calendar months from the month that you received your from the month that you received your phone.
i.e. If you purchased on the 1st of February 2011, you need to send in a bill that is dated within January 2012. e2save will then send you a cheque for £49.61

Instalment 4 - You will need to claim by sending the bill dated 15 calendar months from the month that you received your from the month that you received your phone.
i.e. If you purchased on the 1st of February 2011, you need to send in a bill that is dated within April 2012. e2save will then send you a cheque for £49.61

Instalment 5 - You will need to claim by sending the bill dated 18 calendar months from the month that you received your from the month that you received your phone.
i.e. If you purchased on the 1st of February 2011, you need to send in a bill that is dated within July 2012. e2save will then send you a cheque for £49.61

Don’t forget you’ve got a 60 days claim window for all of the above instalments.

Complicated? … well that’s up to you.  As you can see from the terms above, there is a process to follow to get your phone and contract at the reduced overall price of £15.20 per month, but as long as you follow it you’re OK and will make a saving.

*Please ensure you fully understand the terms and conditions as there maybe slight variations in the process across different partners on the site.

The Pro's and Con's

Cashback by redemption deals often look too good to be true, they are genuine, the simple fact is many people won’t collect on them, and the retailers know that. Yet if you do get cashback it can often cover an entire year’s worth of mobile monthly fees, and is therefore worth many £100s. – which isn’t to be frowned upon!

Be sure to follow some of our tips below to ensure you claim your cashback

Always read the small print on your contract - all retailers are different so make sure you check the small print so you know what you’ve got to do and when.

  1. Call and check the timings needed – you can do this for your own piece of mind.
  2. Be careful with addresses. The address you send claims from needs to be the address you used to order with, otherwise the claim may be invalidated. If you move house, let them know!
  3. Statements online- if you have your phone statements online, make sure you print the correct one and send it in.
  4. Are you keeping your old mobile number? If you port your existing number to the new contract you might be asked to send, in addition, the very first bill you received showing the original mobile number you were allocated. – Again it’s always best to check.
  5. Put a note on your calendar - or a reminder in your new phone to remind you of the dates you need to send your statements in.
  6. Make copies of any documentation sent in.

 

Remember the cashback deal is with the retailer and the tariff is with the network. Sadly cashback retailers can and do go bankrupt; if they do, it’ll be tough to recoup. Yet don’t forget the network encourage these deals, and if you believe you’ve been unfairly treated, it is worthwhile writing a strong letter to the network or Ofcom asking them to investigate.