T here's a new buzzword in the computer industry: free. Dozens of companies have rushed to market with free personal computer (PC) offers, enticing consumers who can't afford or prefer not to spend the average $1,175 sticker price for computers of their own.

If you get what you pay for, what should consumers expect from free PCs? There are strings attached to most "free" offers. Here are some questions to keep in mind if you're considering a free PC.

Are the computers really "free"?
"The consumer does end up paying for these PCs that appear to be free, either through monthly payments or by giving up personal information," says Schelley Olhava, research analyst with International Data Corp. (IDC) in Framingham, Mass.

Most offers require money to change hands. One exception, Free PC ™, trades in personal data instead. In exchange for a free computer and Internet service, you must fill out a detailed survey about your income, hobbies, and spending habits. You also must spend 10 hours a month on the computer and at least one hour on the Internet. Free PC tracks your computer use and permanently fills up a third of the screen with advertisements from sponsors. After 30 months, the computer is yours to keep.

If the computer is not free, what will I end up paying?
In exchange for a computer, most offers require you to sign a 30- or 36-month contract for Internet service. Internet fees range from $20 to $30 a month and are charged to your credit card. At term's end, you'll have paid between $600 and $1,100 for this service. In addition, some companies charge an application fee (around $40) and shipping (about $60).

Many offers may require you to pay for your computer and peripherals up front; the companies then reimburse you with rebate checks a couple of months later.

"A lot of deals involve multiple rebates," says Harry McCracken, senior editor of PC World Magazine. "It can involve a $400 rebate for the computer, $75 for a printer, $30 for a scanner. It can be a hassle."

I was going to sign up for Internet service anyway. Why not do it this way?
Three years is a long time in the fast-paced computer industry. While you're locked in at a certain price for a dial-up Internet connection, it's quite possible that Internet service could decrease in price and other technologies—cable modems, DSI lines, and the like—could speed past dial-up connections.

"Some people balk at having cell phone contracts for a year," says Olhava. "With a free PC, it's three years. That's a long time."

What happens if I want to switch Internet service providers (ISPs) before my contract is up?
It will cost you. Some companies will bill you a flat termination fee. Others may charge you the prorated outstanding balance. For example, if you pay $25 a month for Internet service and have two years left on your contract, the company will charge you $600—24 months times $25.

What kind of hardware will I get?
Each promotion is different from the next. Some companies offer a variety of computers; the newer the system, the higher your monthly fee.

Among the basic models, most free PCs come with:
  • 32 megabytes of RAM
  • An "off-brand" processor from smaller manufacturers like MMX and Cyrix
  • Only one port, which limits the number of peripherals you can plug in
  • Video and audio technology that's a generation behind
  • Mouse
  • Keyboard
  • Modem
Not all offers include a monitor. Carefully read the "specs" for each offer to be certain what the package includes.

"These computers are definitely not the latest and greatest," says McCracken. "They are adequate for people who are doing fairly basic work: using the Web, word processing, balancing a checkbook, and so forth."

What software comes with the machine?
Again, offers vary. Most free PCs come with Windows and Internet browsers as the bare minimum. Others may come with word processing programs; some are loaded with a full complement of graphics, spreadsheets, financial programs, and presentation software. Check the "specs" for each offer to learn what's included.

Will I be able to get customer service on a free PC?
"For some free PCs, the warranty is measured in days rather than years," McCracken says.

Be diligent in comparing the customer service accompanying each offer. How long is the warranty? Does the company have a toll-free customer service hotline? Will you be able to get through when you call? Will you need to ship your computer for repairs, or does the company provide on-site service? Will the company honor the full manufacturer's warranty, or will you have to buy an extended service contract? By asking these questions, you're more likely to keep your free PC up and running.

Should I look for a particular brand name when shopping for a free PC?
There are a lot of players on the free PC scene, many of which you've probably never heard: People PC, Gobi, Sentris, InterSquid.

Unfortunately, not all free PC enterprises have been able to live up to their promises. Some companies have fallen behind on orders; others have understaffed their service centers, leaving callers on the line for hours.

As with any purchase you make, call your Better Business Bureau and state attorney general's office and check if any complaints have been filed against the company. If so, consider some of the other offers out there. Many free PC users are first-time computer owners; they'll need customer service and a company they can depend on.

"A lot of people are better off if they buy a computer from a well-known company like Compaq or Hewlett-Packard," says McCracken. "It's more familiar."

Who should consider a free PC offer?
"People look at the hardware and the price, and it's hard to argue with zero," says Dan Gookin, author of "Buying a Computer For Dummies" (ISBN 0764503138).

Free PCs aren't for everyone. College students usually get free Internet access through their school so they would have no need to pay for Internet service. Also, technology junkies who crave the latest and greatest might find the long-term Internet contract too stifling.

But if you can't afford the lump-sum payment to buy a "regular" computer, the monthly payment plan for a free PC may finally put a computer within your reach. And if you plan on using the computer strictly for basic functions like the Internet and word processing, free PC models just might suit your needs.

And remember, if coming up with the cash is your challenge, the people at your credit union likely can help with a fair-priced loan.

Ed and Liz R. of St. Louis got a free PC this past fall when they signed a three-year Internet service contract with CompuServe. It's their first computer; they're happy with the arrangement.

"We knew we would use it just for the Internet, so we didn't want to put a lot of money into a computer," says Liz. "When this deal came along, it was hard to pass up. We figured we were going to have to pay for Internet service anyway."

How can I decide if this offer is right for me?
Shop for a free PC as you would for any computer, says Gookin. That means looking at software before hardware.

"People usually work backwards; they find the hardware to run the software," Gookin says. "But you need to first figure out which software you need to run. Then find the computer that matches those needs."

"When people are buying a computer, even a free one, we want them to avoid feeling they're stuck with it. If everything falls into place—meaning it's the software, the computer, and the Internet service they want—then free PCs might be a good idea."

© 2000 Credit Union National Association Inc.