As some of you might have heard the big three carriers in the US have all created brand new phone upgrade plans.
The traditional smartphone plans require that at least two years pass before an upgrade is available. However last week T-Mobile, AT&T and Verizon Wireless are giving subscribers the option to upgrade yearly. This is exciting news for people who must have the latest phones and are willing to spend the extra buck. Some of the specifics for the deals are still being worked out but recently there has been some estimates floating around the internet about the deals. So how good of a deal are the upgrade plans? Should you jump in or do nothing and wait an extra year? Should you switch carriers just for the upgrade plan? Today we look at some of the pros and cons of each plan focusing on the iPhone 5 16GB. It should there is numerous variables in each program and these are just some expected estimates.
If you were to use T-Mobile's plan JUMP, you have the ability to upgrade your phone twice a year. The cost of the phone would break down to around $20 a month and also a down payment of $156. If by any chance you want to upgrade your phone after using the program you would need to make at least six payments on your first upgrade. The cost of the service comes down to $10 to enter, and around $50 to $70 for the service. You can leave the carrier only after you paid off the last handset or returned it. The drawback to this plan is that you must pay the full unsubsidized price for the phone in order to own it, or else give it back when you upgrade again.
Verizon will let you upgrade every two years. With Edge you would be looking at $27.08 per month with the cost being divided by 24 months. In order to upgrade within the same year you must pay half the phone which would be around $325. The cost of the service would be around $90 to $140, and again you can only leave the carrier after you paid off the phone or returned it. The drawback is you would pay the full unsubsidized price price to own or else give it back when you upgrade.
AT&T's plan gives you the chance to upgrade once a year. The cost of the phone would be $32.50 a month with the total cost being divided by 20 months. You would have to make 12 payments before upgrading, a total of $390. The cost of the service would be around $60 to $140. Again you can only leave the carrier if you pay the last handset or you've returned it. The drawback are almost the same. You must pay the full unsubsidized price for a phone in order to own it or give give it back.
The Best Plan?
All these plans rely on customers that will upgrade their phone frequently (at least six months) but being honest how many smartphones come out every six months? If you were to upgrade every year which seems more reasonable you would be looking at savings of around $250-$100 with T-Mobile being the best deal and AT&T the worst. Still you would never really own them. You would have to returned them. In comparison to a traditional contract upgrade which allows you to keep them and sell them for about $150-$250.
If you must upgrade your phone every year T-Mobile is the best plan. It's definitely the cheapest plan. Still there's a down payment and the monthly charge to use the program. AT&T is probably the worst. With 12 payments before each upgrade you end up paying for more than half of a phone you won't own and a lot more than the standard two-year contract.
We recommend you don't buy into these programs. These are luxury phone rental programs that when it comes to the bottom line are not worth the monthly and service charges.