Mobile phone cashback deals are a popular perk offered by many UK networks. But what does it actually mean? Here’s everything you need to know

If you search online for mobile phone deals, you’ll find thousands of results in Google. Competition is fierce amongst networks and retailers.

They all want your business and your money, so in order to sweeten the deal many offer benefits like free access to Apple TV, Spotify, or Amazon Prime TV.

Another common “perk” offered by phone networks is cashback on select mobile phone contracts.

You probably already know how cashback normally works (you pay for something and get a little kick-back), but it works a little differently with mobile phone contracts, as you’ll see below.

You also need to factor in things like ELR and the different types of cashback available: auto-cashback and redemption cashback, for instance.

What is ELR (Equivalent Line Rental)?

ELR, or Equivalent Line Rental, is how a phone network figures out the monthly cost of a phone over 12, 24, 32 months. If the phone you want costs £528, the ELR would be £22 per month (on a 24 month contract).

Why? You take the total cost of the phone (£528) and divide it by the length of the contract (24 months). Once you have this figure, the cashback, if your deal includes it, can be deducted.

For instance, say your phone deal came with £25 cashback. This would bring the cost of the phone down to £508 across 24 months, resulting in a monthly fee of £20.95.

If you have a cashback deal, this changes the ELR of your deal (in your favor), whereas if you didn’t have a cashback phone deal, you wouldn’t get these savings. Make sense? Cool.

Now, to complicate things further, let’s now discuss two additional forms of cashback you can get when shopping for a new phone deal.

Auto Cashback

This is the most common form of cashback. When you buy a new phone on contract, the cashback is applied once the transaction is complete. The phone network you bought the phone from will pay the cashback, usually via BACS, within 90 days of purchase.

Redemption Cashback

Redemption cashback is quite a bit different from auto cashback, and it’s a lot more hassle too. With redemption cashback, the cashback amount is paid back to you on a monthly basis over the course of your contract.

However, in order to claim the cashback each month, you have to login to your phone network’s system and upload your monthly bills. Why? Because the network requires proof your bills have been paid before issuing each month’s cashback payment.

Which is The Best Form of Cashback?

Auto cashback is obviously the preferable option here; you get your money in one lump sum, usually 90 days after purchase, and you don’t have to login and upload bills every month.

Are Mobile Phone Deals With Cashback Worth It?

Yes. Cashback is a good thing. If you can save some money, why wouldn’t you? However, I’d argue that it is more important to ensure you get the right amount of data and the right phone for the right price, rather than looking for the best cashback deal.

Choosing a new phone isn’t hard. And there are loads of great mobile phone deals for loads of great phones around online. You just have to know where to look (and which phone to get).

Need help picking a new phone? Check out our guide on buying a new phone.

Know what phone you want and need a deal for it? Check out our Phone Deals page.