Should You Buy Your Next iPhone from Your Carrier or from Apple?

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In the past, when purchasing an iPhone, buying options were very limited. You could walk into an Apple Store, Best Buy, or any of the major retailers and pay full price, or you could simply buy the phone through your carrier at a subsidized cost. This would require you to sign a contract, leaving you unable to switch or cancel plans without paying some hefty penalties or fees.

Starting with the iPhone 6s and 6s Plus, Apple came out with their own way to finance iPhones called the “iPhone Upgrade Program.”

This program was designed so that you could take some of the control away from the carrier and put it back in your hands.

Here we’ll cover the pros and cons of using carrier financing vs Apple’s iPhone Upgrade Program. Knowing what options you have is key to making the best decision come this fall.

Note: Not all carriers are the same when it comes to financing, so make sure to check your carrier’s website for specific details.

Carrier Financing


  1. You can make a down-payment on your new iPhone – this will lower your monthly payments.
  2. Devices can be traded-back-in to the carrier (usually after 12-months or 50% of the balance has been paid) allowing you to upgrade to a new device. The remaining balance will be forgiven but it will require you to sign a new contract.
  3. Most carriers offer different term lengths to suit your needs. For example, AT&T offers a 30-month and 24-month installment plans.
  4. You can finance any model phone. Current and past generation models are available for carrier financing.
  5. Carrier financing doesn’t require a credit check for existing customers, only if you’re opening a new account.


  1. You’re tied into a contract with the carrier for the length of the term. Switching to a new carrier would require a termination fee and paying off the remaining balance of the phone.
  2. Phones are “locked.” A locked phone is a phone that can not be switched to another carrier without requiring software adjustments to be made by your original carrier.
  3. AppleCare+ must be purchased separately, and most carriers require insurance on leased devices.

iPhone Upgrade Program


  1. You’re not tied into a carrier contract. If you’re unhappy with your carrier, you can switch without needing to carrier-unlock. This is also great if you plan to travel internationally and you’re going to use a different carrier at your destination.
  2. AppleCare+ is included in the monthly cost. You don’t have to pay for all of AppleCare+ up front. This is also offered as a separate monthly payment for those who don’t use the iPhone Upgrade Program, but you end up paying more for it in the long run.
  3. After 12 months (or 50% of the device paid off) you can upgrade to a new iPhone. After 24 months the device is yours. This is great if you’re the type to get a new phone every year OR if you like to keep your phone as long as possible.


  1. A credit check is required for approval and it’s a “hard” credit check. The payment plan is done in partnership with Citizens One Bank and they require a higher tiered credit score for approval.
  2. iPhone Upgrade payments are made on a separate bill. You will have to pay two bills. One for the phone and one for cellular service.
  3. The iPhone Upgrade Program is only available for the latest generation phones. Currently, Apple offers the iPhone 7 series and newer for purchase in the Apple Stores and online. If you decide to purchase the iPhone 7 or 8 series, you can not use the iPhone Upgrade Program. Only the current flagship phones are available.

What’s Best?

  • If you are the type of person who doesn’t want to be held back by a carrier contract, or may be traveling and need to change carriers overseas, then the iPhone Upgrade Program may be for you.
  • However, if you don’t mind carrier contracts and just want the simplicity of one bill, or you could see yourself switching from iPhone to Android at any time, then carrier financing is the way to go.

I personally have used the iPhone Upgrade Program since it launched and I’ve been happy with it – but of course, it might not be the right decision for everyone. If neither option sounds right for you, consider purchasing your device outright on eBay or Amazon.

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