You probably already know that mobile phone retailers are falling over themselves to better each others deals. You will see many websites and high street shops advertising free or discounted line rental offers for 6, 9, 12 even 14 months.

So how can the dealers make these seemingly crazy offers? First, you need to understand how the dealer gets paid and how the mobile phone industry works (just a little bit). The dealer gets paid by the network, based on what price plan (tariff) he connects the customer to; a higher price plan means more money for the dealer.

Dealer Profit

Then the dealer must pay for the cost of the phone. A high quality and expensive phone means less profit for the dealer. The difference between the tariff commission and the cost of the phone gives the dealers gross profit.

However, the dealer must then pay any cashback money from this remaining commission. The dealer basically is 'betting' on how many customers will claim their cashback money after the stated 6th/12th month (or as given); the lower the percentage of customers that claim, the higher the dealers profits. The higher the percentage claiming, the closer the dealer comes to going bust!

It is a fact that many are actually offering deals to customers that do not make them any money at all, and may make a loss. So how can they make this work?

Retailer goes bust without paying customer

The worrying problem is that some do not make it work, and have gone bust. Less reputable and unstable companies have not got the balance right and had to pay out so much cashback that they simply do not have the money in their coffers to pay, and have closed shop leaving the customer without their cashback money.

In 2004 Mobile Republic went into administration allegedly for this very reason, and left many customers without their cashback.

Take the benefits of cheap offers but miss the problems

So how do you avoid this disastrous situation?

In short, use a reliable company that has good business history. For example, the Carphone Warehouse has been established for over 10 years, as has Mobile Phone World, the company behind www.2u.co.uk.

It is important not to be seduced by the attraction of too-good-to-be-true offers from companies that have not been established for a long while - it is quite likely that they might go bust before you have had your cashback monies.

Check the small print

It is also vital to pay great attention to the Terms and Conditions of the cashback redemption procedure. Most require you to send in your mobile phone bill for your (eg) 6th month of connection within 28 days of receipt.

There for a reason

This is not just petty procedures to make it harder for you to claim … it is because the dealer will receive a clawback of their tariff commission if the customer does not pay their phone bill within the first 6 months, or changes to a cheaper tariff. Sending in the bill gives the dealer proof that you are still connected and still on the same tariff.

Get the Best Deal - Safely

So 2 Top Tips: How to seduce your wallet with the best deal - for the long term:

1.Only choose from well established phone retailers such as

Carphone Warehouse

2U Mobile Phones - www.2u.co.uk

The Link

Phones 4U

2.Read closely, print out and keep the cashback redemption Terms and Conditions so you can follow them to the letter in claiming your cashback

With this information you can now search the internet for the best mobile phone for you.