Let’s face it, whenever I purchase the newest phones on the market and get sucked into the 2-year contract pricing, I think to myself, how am I going to survive with the same phone for 2 years (which rarely happens)?! This thought process also occurs when you see a new, next generation phone coming into the marketplace that you just have to have. The large cell phone carriers are looking into ways to allow customers to upgrade their phones and take advantage of new phones in the market more often than your contract states. Do these plans really provide a cost benefit? Or are they a complete ripoff?

Let’s take a look at the differences between the programs and how they are structured to lure customers in. Verizon, AT&T and T-Mobile all offer variations of this program which allows customers to get phones more frequent by paying an additional (yes, on top of your bill) monthly fee. The plans sound like a great idea because you’ll be able to stay up with the current technology without having to pay full price up front or resigning your contract every time, but is it really? Something to keep in mind is that you will not get to keep any of the devices that you don’t finish paying off. The carriers allow you to trade in your devices for a new one, but you won’t be able to take advantage of selling your phone off to one of your friends for some extra cash unless you pay each phones total cost. Another thing is that even though you are not signing up for a two-year contract, you still cannot leave the carrier if you owe a remaining balance on your phone. One of the biggest differences to consider is how often you’re looking to switch phones, the chart below breaks out some of the main differences between upgrade frequency and fine print.

What about pricing? Each carrier structures their deals slightly different with varying monthly costs depending on which phone you are looking to purchase, ranging anywhere from $15 to $50 per month (a lot of the carriers have not released specific pricing yet for the majority of phones). AT&T and Verizon have slightly higher monthly service costs compared to T-Mobile, which causes the potential savings you'd gain on the device to be eliminated when you add in the service plans. Another difference is that T-Mobile’s plan also acts as phone insurance to allow you to turn in old or damaged devices and get a replacement. Upfront costs vary depending on which phone you’re looking to purchase but as an example for AT&T if you’re going to buy the Galaxy S4 similarly to the example below, you will need to pay $200 up-front to get locked in for a two year cost, if you leverage the Next program, you will pay $384 to reduce that cost to a one year contract, but it’s split into monthly payments to avoid upfront costs. You will end up paying more either through a payment plan or more for your device, so you will pay more both short term and long term. The below takes a quick look into some of the pricing differences between each carrier:

From my review of the separate plans, these may only make sense when you intend to get a new phone every year and if you’re not planning on leaving your carrier anytime soon. The plans eliminate up-front costs, provide you the ability to upgrade your phone more often, and it can often be cheaper than buying an unlocked phone at retail costs. Although, from looking at the pricing comparison, is really worth paying the extra $180 and some to be able to upgrade every year and not even keep the phone? I feel these plans will only work for a small number of consumers, those who do not like signing their life away with a two-year contract or if you’re one of the select few who actually have T-Mobile and want the latest and greatest phone every six months.

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Danielle Rosato

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