Comparing Apple's iPhone Upgrade Program with AT&T, Verizon, Sprint, T-Mobile

In addition to all the new devices yesterday, Apple also announced its iPhone Upgrade Program. This joins the ranks of the cell carriers' relatively new programs that allow customers to finance the purchase of a phone over time. AT&T's Next, Verizon's device payment program (formerly Verizon Edge), Sprint's Easy Pay, T-Mobile's Equipment Installment Plan and, starting soon, Apple's iPhone Upgrade Program all allow customers to finance the purchase of an iPhone with full transparency into the difference between the cost of the phone and the cost of the service. Most importantly, the payments related to all of these programs end when the phone is paid off, keeping service fees lower for most users.

An ocean of pennies with logos of Apple, AT&T, Verizon, Sprint, and T-Mobile

In addition to this fairly standard financing arrangement, all these plans allow you to trade in your iPhone at a pre-set interval (most are 12 months) and get a new phone along with a new payment plan. The trade in allows you to get a new phone every year without worrying about what to do with the old one. Handy for serial upgraders like, well, many of us.

It's at this point, though, that Apple's program begins to differ from those that the carriers offer because it's not tied to any one carrier. Apple's comes with a few benefits, albeit at an extra cost. To investigate, let's compare the cost of a 64GB iPhone 6s from Apple vs. the carriers.

Below is a breakdown of each major U.S. carrier's finance programs with a total of how much that program will cost you:

  • Unlocked 64GB iPhone 6s purchased outright: US$749.00
  • T-Mobile EIP price: $99.99 down + 24 payments of $27.08 each = $749.91
  • AT&T Next 12 (20 month plan that lets you upgrade after 12 months) = 20 payments of $37.50 each = $750
  • Sprint Easy Pay = 23 payments of $31.25 and the 24th of $31.24 = $749.99
  • Verizon device payment program = 24 payments of $31.24 = $749.76

(it's also worth noting that both Sprint and T-Mobile recently rolled out "iPhone Forever" programs where, for between $15 and $30/month, you're guaranteed the ability to upgrade, but we're comparing Apples-to-Apples here, so to speak, so I've left those out).

As you can see, the carriers' finance programs all have one thing in common: they're financing iPhones with 0% interest, give or take a few pennies. Presumably they have some margin on the purchase and, regardless of that, they make their money in the service they'll sell you while you're paying off your loan. You can leave by simply purchasing your phone (or going through other red-tape gymnastics), but they're banking on the hope that you won't.

  • Here's Apple's iPhone Upgrade Program pricing: 24 payments of $36.58 = $877.92.

Whoa. That's a huge difference. There's some reasons for it, though, so keep reading. First, Apple's iPhone Upgrade Program includes AppleCare+, a $129 value for iPhone 6s and 6s Plus owners. If you were going to buy that anyway, this is an opportunity to finance it.

Apple's program comes with another benefit: your iPhone is unlocked the day you receive it. That's also true with some of the carriers (Verizon, for certain), and once you've made a few payments and your carrier is happy with you they'll likely unlock your phone regardless. Apple makes it easy, however, and that will have value to some customers.

The biggest benefit of Apple's program is that you'll be guaranteed to be on Apple's schedule. Right now, AT&T customers who bought an iPhone 6 last year with AT&T Next will have to make an off-cycle payment to be able to pre-order an iPhone 6s or 6s Plus on Saturday morning. Not a huge deal, but one that goes away if you move to Apple's camp on this.

The biggest negative to Apple's program is that it requires you to pick up your device in-store. You cannot use their program and have the device shipped to you. That may change some day but, for now, keep it in mind as you shop.

Happy iPhone purchasing!

Image made with help from Shutterstock.