How Do Phone Upgrades Work: A Detailed Breakdown Of This Common Practice

There are lots of different smartphones on the market these days. Doubtless, you’ve heard of the iPhone, and probably Samsung as well. There’s also LG, Micromax, Huawei, ZTE, Walton, and many more. At the same time, equally many cellular service providers exist. Some of the most prominent ones are AT&T, Verizon, Sprint, T-Mobile, and Cricket, but there are lots of others.

Regardless of which phone and service plan you have, one of the options that have probably been presented to you is that of an upgrade when you sign up, or when you’ve been with a provider for a certain length of time. Is it worth it to do so, and how does it work? We’ll take a few moments to answer both of those questions.

How do Phone Upgrades Work

Are Upgrades Different from Different Cellular Service Providers?

You Can Get a Phone Upgrade at an AT_T Store

If you’re interested in phone upgrades, then you might be operating under the assumption that they work the same with all of the different cellular providers that are out there. However, this is incorrect.

There are as many different ways of setting up smartphone upgrades as there are cellular providers. The rules and stipulations for how and when you can upgrade are different for AT&T, Verizon, Sprint, and all the others.

However, while the details are going to vary depending on what company and plan you are using, there are typically some universalities when it comes to this practice of which you should be aware. 

First, in almost all cases, a phone upgrade is considered to be an incentive. Generally, those who desire that upgrade would be consumers who want the new iPhone, Galaxy, etc. when it becomes available. The latest versions often have additional features that are exciting to consumers. Think of the splash it made when Apple introduced their Hey Siri voice-activated assistant, or when they switched over to Face ID functionality.

Often, what happens with companies like Verizon or T-Mobile is that in order for you to get a free phone upgrade, they’ll want to lock you into a long-term contract with one of their higher-end plans. Let’s say that you currently have something like an iPhone XR, and you’re interested in one of the 11th generation models with the improved camera functionality that has been advertised on TV lately. You’re using a company like Verizon for your cellular needs.

Upgrade Your iPhone X to an 11

You may be willing to get locked into one of the higher-end contracts, such as a four-line family plan with unlimited data streaming for two years. If so, then they will probably let you upgrade that current iPhone XR to a generation 11 model.

Why Do Service Providers Set Up Contracts in this Way?

If you think about it, structuring contracts in this way makes sense for the service providers. There are many consumers now who are gun-shy about committing to any contract at all. That’s why most cellular providers offer no-contract monthly options. However, they’re still looking to get you to sign that long-term contract in any way that they can.

Phone upgrades are one of the best weapons that a cellular provider has to try and get you to do that. If you are ready to sign a two-year contract, or even longer, for yourself and your family, then in their minds, the cost of exchanging your older-model phone for a newer one is negligible. You get the latest technology that you want, and they’re assured of your business for the next two years. They’ll often want you to sign up for autopay as well if you go this route.

What About if You Want to Cancel the Contract?

Maybe you’ve taken one of the deals that a cellular service provider has offered. You’ve upgraded your old phone to a newer model, and you’ve signed that two-year contract. Now, however, you’re dissatisfied with the service. Perhaps you live in a more rural area, and you’re finding the cellular service to be spotty for the particular company that you chose.

You want out of the contract, but you’re locked into it for several more months. What can you do? Unfortunately, unless you want to be patient and wait out the length of the contract, you’re going to get hit with a significant cash penalty if you break it. You’ll be out of the contract, but you might have to return your newer-model phone if you leased it rather than bought it. The lump sum of money that you’ll have to pay for breach of contract is also prohibitive.

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From the standpoint of the service provider, though, either option is fine. Either you keep paying the agreed-upon monthly fee through the end of the contract, or you pay the penalty for early termination. They get their money regardless of which way you go.

Is It Worth It to Get a Phone Upgrade?

Watch Out for Early Termination Fees

As for whether it is worth it for you to get a phone upgrade, that’s a question that each consumer is going to have to answer for themselves. If you’re intent on getting that new model of phone, then you may be willing to get locked into a longer-term contract. It’s probably going to be more worth it to you if you know that the particular service that you are considering is well-reviewed in that part of the country.

There is usually a way to get a phone upgrade, though, and also to avoid getting locked into a long-term contract. You can exchange your older phone for the new one while also paying a cash fee. Let’s say it’s that same scenario where you have an iPhone XR, and you want a generation 11. The XR is still a relatively recent model, so it has value as a trade-in. You probably won’t have to pay more than a few hundred dollars to get yourself the generation 11, rather than the $1,000 or $1,200 you’d be paying to get it brand-new with no trade-in.

Do Your Research Before Pursuing an Upgrade

Choose Your Phone Contract Carefully

As you’re thinking about how best to structure your deal with the cellular service providers in your area, it’s best to look at consumer feedback, and also to speak to some representatives from the companies. Explain your situation. Look on their websites and see what kind of deals they have available for consumers who want the latest model phones.

There are some shoppers who stay with the same provider for many years. They have contracts where they get a new phone every two years when it comes out, as seems to be the schedule for the latest iPhone models. Many of those who choose to do this are tech aficionados who insist on getting that shiny new toy with the latest features the second it hits the market.

You don’t necessarily need to do that. You might prefer to do a one-time phone upgrade, at which point you will be satisfied with your new device for several years to come. As we said, the needs of no two consumers are identical, just as every cellular service provider’s offerings are going to be different.

In the end, it is going to be up to you whether or not you want to pull the trigger on the various phone upgrade deals that are out there. Make sure to read all of the fine print before you sign anything, though. These providers can be a little sneaky sometimes. The last thing you want is to get tethered to a long-term contract with unpalatable details because you didn’t fully understand all of the stipulations when you signed up.