Planning on Getting Your New Phone with the iPhone Upgrade Program? Some Things You Should Know.

The iPhone X is pretty sweet, but you should know what you are in for if you sign up for the iPhone Upgrade Program.
The iPhone X is pretty sweet, but you should know what you are in for if you sign up for the iPhone Upgrade Program. Photo by William Hook via Flickr
Over the weekend, my wife and I decided to replace our iPhones. Her phone was in disarray for reasons that aren't worth discussing here. We were both switching cell phone plans from AT&T to TMobile (for many reasons), so it was just time. Both of our existing phones were unlocked, so we could trade them in, which we did.

Before you dig in on "Apple sucks," save that for a post where we are debating their merits, which I am not here. Second, I know they are more expensive than Android. That did not factor into the decision, so let's just set that aside. Finally, there are some very good reasons for financing through Apple if you don't want to drop the $1,000 or more on the new phone at once.

First, it is interest-free. It's like layaway, but you get to take it with you. Carriers offer similar financing plans, but you typically have to pay a lot up front (for the iPhone X, for example, at TMobile, it's over $500 up front), whereas Apple is minimal (more on that in a moment). Second, the plan includes an upgrade after the first 12 payments (or half the cost of the phone) is paid off. With the rebates on our phones, we were well over halfway there. Finally, the Apple financing offers Apple Care, which is the best insurance you can get for any device.

And more importantly, the phones are completely unlocked. If you want to move to another carrier at any time, you can, which felt really valuable to me.

However, and you knew there was a however, there are some things you should know if you decide to do what Apple calls the iPhone Upgrade Program.

The cost up front, while less than through a carrier, includes a "hidden" cost.

Technically, all you pay up front on the phone is the first month. For an iPhone X, that's about $56. However, you are ALSO required to pay taxes on the entire purchase. That's another $100-plus, taking your total to just under $170.

No debit cards.

The first payment MUST be paid with a credit card. No exceptions. I don't carry any, so my wife had to set it up. But, be aware that you have to change the payment option after the financing is set up or they will charge that same credit card every month.

Every phone is a different financing plan.

If you buy more than one phone, you are essentially signing up for two financing plans. There is no combining them, not even after the fact. That also means there are TWO payments every month.

You can only get two phones per person.

We attempted to help our niece finance a phone as well, but we were limited to two. If we wanted another, we would have to do it under another name and another credit card. So, if you need more for a larger family, beware. (My niece, by the way, having saved money all summer, paid for hers outright.)

Apple does not do the financing.

That is handled through a regular bank, so don't expect Apple to be managing any issues for you. They will point you to the finance company in much the same way a car company would direct you to whoever financed your car if you had an issue with your loan.

Ultimately, for us, it was worth it because we enjoy the products and the financing makes sense since we pay no interest, get upgrades sooner than with most plans and can include Apple Care. But it makes sense to have some knowledge going in. It certainly would have made it easier on us had we known in advance.
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Jeff Balke is a writer, editor, photographer, tech expert and native Houstonian. He has written for a wide range of publications and co-authored the official 50th anniversary book for the Houston Rockets.
Contact: Jeff Balke