This iPhone has activated a limit on the number of free accounts.

It's not Apple IDs which are the issue - you can create any number of those - it's iCloud accounts. The message you are seeing happens when a) you try to log into Settings>iCloud (or Apple ID on Catalina) using an Apple ID which has not yet created an iCloud account, and b) the device you are doing this on has already been used to create three iCloud accounts. That three is the limit; after that you can't create any more iCloud accounts whatever you do - it's tied to the hardware, not the account, and deleting accounts from it won't make any difference.

Note that an Apple ID, though it may have been used to purchase items from iTunes and to log in here, doesn't have an associated iCloud account until you specifically create one by logging in in Settings (or System Preferences)>iCloud (or Apple ID on Catalina).

What you can do is to create a new iCloud account on another iOS device or Mac (not Windows or Android). Once you've done that you can log in to that account on the first device without problems.

You. can create a new Apple ID on another device, but you won't be able to log it into your phone. See this document How to create a new Apple ID https://support.apple.com/en-us/HT204316 You won't be banned.

You can create the iCloud account on another device (which would have to be signed in with your Apple ID, obviously) and then you can sign into the account on your phone: there's no problem about that and you won't get banned. Make sure to sign out on the other device if it doesn't belong to you.