Cost of iPhone Upgrade Program vs Two Year Contract

I received an email from Apple that advertised their iPhone Upgrade Program. I’m currently on the iPhone 6 and was on the iPhone 5 prior. Before Apple, I used an HTC Thunderbolt and the Blackberry Storm. I tried the various platforms and I chose the iPhone because I was more productive with it. When the iPhone 6s was released, I thought about upgrading, but I had the iPhone 6 for a year so there was still a year left in my contract. I could shell out the extra money to get the new 3D Touch feature, but decided it didn’t make sense from a cost perspective.

After reading about the iPhone Upgrade Program, I decided to break down the costs to see which one was in my best interest.

iPhone Upgrade Program

The program allows you to upgrade to the new iPhone every year as long as you’ve made at least 12 payments and it’s been at least six months since your last upgrade. If you take a look at the MacRumors Buyers Guide, you’ll see the average release cycle is 379 days between iPhone releases so that lines up nicely with the 12 payments (1 every month). Along with an upgrade every year, you get accidental damage coverage through AppleCare+ (valued at $129 for 2 years) for two incidents (with a service fee/deductible of $99 per incident for the newest iPhone) which includes screen damage, accidental drops, and liquid damage. To recap, the program is essentially a two year financing program with 0% interest and includes insurance. To look at the cost over two years, you’ll pay $32.41 a month which comes out to $777.84. That price does not include the data plan, that’s just the phone and insurance.

Verizon Two Year Contract

This is the “program” I’ve used since I moved to Verizon from Sprint years ago. Every two years, I can upgrade for $240 ($40 in fees) to the latest and greatest phone the carrier offers. For insurance, I use SquareTrade and purchased the 3 year plan for $129 with a $75 deductible per incident. SquareTrade gives you points for purchasing their insurance for electronics so after covering a few devices, you get free insurance for a device. I have coverage for my iPhone 6, iPad Mini 4, and Acer Aspire 7 laptop. A bonus is if you cancel your coverage, you will get a prorated amount back for the number of months left. You also get 30% back if you stay on your plan until the end without filing a claim. The cost is $369 ($240 + $129) over two years. That price does not include the data plan, that’s just the phone and insurance.

Which Plan to Choose?

The cost difference is $408.84 ($777.84 - $369) over two years. The last piece I didn’t mention above is in the iPhone Upgrade Program, you have the turn in your current iPhone if you want the latest model. On the Verizon Two Year Contract, you are free to sell your phone to services like Amazon Trade-In or Gazelle - both of which I’ve used in the past. I was able to get $100 for my two year old iPhone 5 and $44.77 back from SquareTrade (1 year remaining on my warranty) which brings the cost difference to $553.61 ($408.84 + $100 + 44.77).

After running the numbers, I decided stay with the Verizon Two Year Contract and save $553 over two years. For that amount, I don’t need the latest and greatest every year.

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