Explaining Each Carrier’s Confusing Plans to Buy a Phone

The next time you buy a new cell phone, things will look different. The subsidized two-year contract is practically dead, and carriers have replaced it with a new pile of confusing options. Here’s what you need to know about buying a phone in 2016.

January 2016: Added new information on AT&T plans to this post. As of January 8, AT&T will no longer have subsidized contracts , so plan accordingly. Or stop buying phones from carriers because it really sucks .

It would seem that buying a new phone would be easy. You can go to the store and buy a laptop or tablet. Why not a telephone? This is partly our fault. We need the trendiest new phone without paying a ton of money. The carriers met this need with a bunch of increasingly complex plans. While each carrier’s plans are unique, they do have some common ground in general. Regardless of which carrier you use, here are the main types of service plans you can find:

  • Subsidies: Until recently, this is how you probably got your new phone. When you sign up with a new carrier or plan to upgrade, you are eligible for a subsidized phone. These phones are either free or on sale at a deep discount. In return, you agree to stay with the carrier for two years or pay a hefty departure fee. When your contract expires, you own the phone.
  • Funding: With this type of plan, you pay the full retail price of the phone over time. Usually the cost of your phone is divided by 24 months. You cannot leave your carrier while you have phone debt. When you pay for the phone, it becomes your owner. Unlike the subsidy model, this usually also means your monthly bill will be cheaper once you pay for your phone.
  • Rentals: A relatively new option, cell phone rental plans include a monthly fee to rent the phone from your carrier. Some operators’ lease plans allow for renewal much more often than the usual two years. However, you won’t have any of the phones unless you pay a large commission to redeem it. If it breaks and you don’t have insurance, you will also be hooked at full cost.
  • Early update: Early update plans tend to be the most confusing options. This is a kind of middle ground between leasing and financing. They usually let you update more often than every two years. Unfortunately, the details of the contracts confuse them. If your carrier offers an early upgrade plan without calling it a lease, you need to take a close look at the fine print.
  • Buy Direct: Nearly every carrier will let you pay upfront for your phone, and you can always buy it from someone else. This will always be your most expensive upfront option, but it also means that your device already belongs to you. Your monthly service plan will usually also cost less since you are not paying for equipment.

Not all carriers will offer all of these options. Some may suggest all of them, while others may only offer one or two. There is no one perfect plan for everyone. Some choose to own all of their devices, while others only care about having the latest and greatest, whether or not they keep their phones.


Of all carriers, Verizon offers the most simplistic plans, which are the most similar to the old model. Verizon recently decided to ditch all of its subsidized telephony plans as well as its complicated Verizon Edge early upgrade plan . You now have two very simple options: either pay for the phone now and you can leave Verizon anytime, or pay for it over time and be tied to Verizon.

Option 1: Fund your phone with monthly payments

Verizon’s carrier funding is simply called Device Payments . This is the only way to buy a phone without full prepayment. With Device Payments, you pay for your phone in 24 months. This means that the monthly price of a phone will always equal its full retail price divided by 24. For example, a standalone 3GB line on Verizon currently costs $ 65 a month. If you want to add the iPhone 6 , which costs $ 650, your monthly phone bill is $ 27.08. Your total bill will be $ 92.08 until that phone is paid, after which your monthly service bill will drop to $ 65 (until you get a new phone).

Verizon requires you to keep paying for services until your phone has been paid. This means that if you want to leave at any time, you will have to pay for the rest of the phone. This is slightly fairer than the exorbitant ETF fees you’re probably used to, but the effect is still largely the same. If you want to leave early, it will cost you.

Unlike the other carriers listed below, you cannot add additional monthly fees to your phone balance. You can pay for your phone in full at any time, but you cannot voluntarily increase your monthly payments to pay off sooner.

Option 2. Buy the phone right away

The only other option to get a phone on Verizon is to buy it directly. While Verizon offers a wide variety of phones that are compatible with their network, you don’t need to buy them directly from Verizon. However, if you choose to buy from a third-party manufacturer, you need to first make sure your device is compatible with the Verizon network. Verizon is one of only two carriers in the US to use CDMA networks, which means finding compatible phones can be a little tricky. You can check out our guide to finding a compatible phone here .


Whichever option you choose, you have to pay full price for the phone and that phone is yours. There are only two questions left to ask. First, can you get a better deal over the phone elsewhere? You can often save money by buying a phone from a third-party manufacturer rather than Verizon itself. While there are exceptions (for example, the iPhone 6 from Amazon for Verizon is now about $ 100 more expensive), third-party sellers are usually more motivated to give you a discount.

Second, will you be satisfied with Verizon’s services in the long run? Verizon funding doesn’t give you the option to make additional payments to your device – for example, you can’t choose to pay $ 100 every month for this iPhone 6 and be eligible to leave Verizon after 6 or 7 months – but it does make it easier to buy a new phone. which could otherwise be prohibitively expensive. If you’re comfortable with Verizon long-term, funding is a great deal.

Bottom line: Verizon’s plans are now the simplest of all carriers. T-Mobile and AT&T have relatively straightforward funding, but also clothe the process with early upgrade plans, which may or may not be (but usually aren’t) good deals. Sprint still requires complex math to figure out the best deal. If you want a reliable large network without silly updates, Verizon is a good choice.


Effective January 8, 2016, AT&T has graciously simplified its plans. Now, choosing the best option for you has become much easier. For the most part, AT&T offers you the option to pay for your phone now or over time. However, there are options if you want to upgrade sooner.

Option 1: Fund Your Phone with AT&T Next

AT&T’s funding plan is called AT&T Next. It is also a variant of an early update that we will come back to a bit later. Depending on your credit, you can slowly pay off your phone over a period of 20, 24, or 30 months.

If you don’t use the early update option, phone funding works like this: First, you (with a little help from your credit score) choose how much time you want to spend paying for your phone. The cost of your phone is then divided by this time and added to your monthly cost. Here are three options:

  • AT&T Next 24: Pay for your phone within 30 months or upgrade after 24 months.
  • AT&T Next 18: Pay for your phone within 24 months or upgrade after 18 months.
  • AT&T Next 12: Pay for your phone within 20 months or upgrade after 12 months.

So, for example, if you select AT&T Next 18 , the price of your phone will be divided by 24. This monthly price will then be added to your service bill. Let’s say your phone is usually $ 600. With Next 18, you’ll pay $ 25 per month for two years. After you make all payments, the phone is yours and you can leave AT&T. If you want to leave early, you will need to pay the balance on your phone balance.

If you like the old subsidized model, where you get a phone in advance and work with an operator for a couple of years, slowly paying for both the service and the phone itself, then this will be fine for you. The only difference is that now your monthly bill will depend on the value of your phone.

It’s also worth keeping in mind that AT&T does not allow you to pay extra monthly for your phone. If you prefer to pay for your phone in six months instead of twenty, you won’t be able to pay $ 100 every month. You can pay in full for your phone ahead of schedule at any time, but you will need to pay the entire balance. If you want to work out a shorter time frame, your best bet is to pay the monthly amount owed to AT&T and then save a little more each month in your own account. Once you have accumulated enough, you can pay off in full. You can also use AT&T Next with a down payment to deposit a certain amount up front to lower your monthly expenses.

Option # 2: Use your early upgrade option with AT&T Next

As previously mentioned, AT&T Next also includes an early update option. We discussed earlier how these options can lead to a bad deal . Next is still not very good, but if you don’t plan to sell your phone and don’t mind staying with AT&T for a long time, you may still prefer this option.

Early updates work by allowing you to trade your old phone after you’ve made a certain number of payments. Then you can get a new phone and start your data plan again. The plan number indicates when you can upgrade to the new version. So, for example, with AT&T Next 12 you can upgrade to a new phone in 12 months.

However, in any case, you will have to pay more than half the cost of your phone before you can exchange it and get a new one. Basically, you pay to rent the phone for between one and two years. Worse, the longer Next plans are worse for you than the shorter ones.

For example, let’s say you bought a phone for $ 600 with the Next 24. You pay $ 480 for two years before you can upgrade. Returning this phone to AT&T isn’t a good idea if you can pay for it for $ 120 and sell it for $ 300-400. Even if you buy $ 200 for your old phone, then you will still be ahead.

If you want to downgrade, it is better to use shorter contracts. In the same example, using the Next 12 plan, you would only pay $ 360 for this $ 600 phone before exchanging it. You will pay more per month, but you will spend less when you finally exchange your old phone. and you will have to wait just a year, not two years, to upgrade.

No matter what you do, Next is not the most economical way to upgrade, simply because you need to swap your phone. You pay between $ 200 and $ 500, depending on the price of your phone, to borrow it for at least a year. If you break it, by the way, you are also on the hook. If you’re okay with this risk and don’t plan on selling your phones anyway, then Next is a good way to update on an annual basis. Just stay away from long term plans if you can.

Option # 3: Redeem Your Phone Immediately

Buy outright is an attractive option for AT&T, if only because it is not difficult . Phones have price tags, you give the cashier the money, and you’re done. You don’t pay for the phone every month, so your bill will be lower. You can also freely change the carrier or upgrade if you have the money for this.

Finding a phone that works with AT&T is also much easier than finding a phone that works with Verizon or Sprint. AT&T uses the GSM network for everything, and GSM is overwhelmingly more popular worldwide than CDMA, so if the phone you buy supports the correct radio bands , you can go to just about any store, manufacturer, or phone model and find the device. which will fit. work on your network. You can also use WillMyPhoneWork to see if you are unsure.


As long as you buy the phone outright or get funding over time, AT&T’s plans will finally be easy. You can pay for your entire phone now or for two and a half years. Ultimately, it doesn’t matter if you opt for financing or prepay as you pay the same amount anyway.

The only complication comes from the early update of AT&T Next. Having to exchange your phone after you’ve paid more than half the price of a sticker is a small waste. The only reason you might think about it is because you don’t plan on selling your old phones or repurposing them for something useful . However, we strongly recommend that you consider an alternative first. And if you do use AT&T Next, at least go for the shortest contract you can to save money in the long run.

Bottom Line: Ditching subsidies made AT&T’s plans much easier to understand. Whether they are cheaper or not is under discussion, but the best option now is to simply pay for the phone. Either right away or over time. When you get your phone, sell or repurpose it to get the most out of your money.


If you’re looking for someone to blame (or thank) for carrier contract changes, then that’s T-Mobile. The operator started this trend back in 2013 by completely eliminating subsidies . Now the main way to buy a phone through T-Mobile is through funding, but they also have a few upgrade options if you don’t want to wait.

Option 1: Fund your phone with monthly payments

Like Verizon, when you need a new phone on T-Mobile, you’ll pay the full price of the phone divided by 24 months. They call this their Equipment Installation Plan (EIP). You may need to make a prepayment, depending on your credit and the cost of the phone. If you do, the down payment will go towards the full cost of the phone, which will reduce your monthly bills.

However, unlike Verizon, you can pay extra each month to pay off early if you so desire. You can also make a larger down payment or make additional payments to your EIP in addition to your monthly bill. However, you cannot simply overpay your regular bill. You will need to sign in to your T-Mobile account, go to the EIP section and make a separate payment to your device’s plan. This will lower your total EIP balance and thus lower your next total monthly payments to T-Mobile. Once your device is paid for, the EIP is charged and you just keep paying for the services.

You can also fund multiple devices with the same line of credit. When you are first approved for an EIP, you will receive a spending cap. You can add as many devices to this plan as you like, as long as you stay within your spending limit. So if you want to fund a phone, tablet and watch connected to the same line, or if you want to upgrade to a new phone after a year, you can do so within that limit. T-Mobile won’t force you to pay the full cost of any previous device when you add a new one. However, if you want to sell your old devices, you will have to pay in full for that particular device before they can be transferred to another person’s or another carrier’s account.

Option # 2: Get early updates (and phone insurance) with Jump!

T-Mobile’s first plan for an early update is called Jump! It costs $ 10 a month to add this service to your account, which means this is the only early upgrade plan among major carriers with a buy-in. However, this also includes insurance for the device . Usually, T-Mobile insurance costs $ 8 a month, so if you were planning on insuring your phone anyway, you only spend $ 24 a year. However, if you weren’t planning on getting insurance, that’s an additional $ 120 per year.

Once you sign up for a data plan, you will make monthly payments to your device as usual. As with the funding option, you can pay extra to your balance if you want to downgrade. After you have paid more than half of the cost of the phone, you can exchange your old device for a new one.

Whether or not this data plan is worth it depends a lot on whether you want to keep your old phones or sell them. For example, let’s say you started with a $ 600 phone and paid $ 300. For another $ 300, you can become a phone owner. If you then sell it for more than $ 300, you will save money, not sell it. Remembering, of course, that you will also be charged an additional $ 10 per month for this privilege.

If you’re ready to put in the effort to sell your old phones, trade them through Jump! probably won’t be the most economical option. However, you will always have the option to fully redeem your phone so you don’t have to exchange it. Considering that Jump! also doubles as device insurance, you only pay a small premium to give yourself the opportunity to trade your phone (again, assuming you would pay for insurance anyway, which is not always necessary ). This can be handy if you end up with a phone that doesn’t retain its value for a long time.

Option # 3: Rent out some new phones with Jump! On demand

Technically, T-Mobile’s newest plan is rent. With this plan, you can update much more often than with any other tariff plan from other operators: up to three times a year. You make monthly payments over the phone as usual, but at any time you can go to the T-Mobile store and drop your old phone in and get a new one. Of course, since this is a rental, there are a few caveats.

First, you don’t actually own the device unless you buy it. After 18 months of regular payments (the cost of the device divided by 24 months), you can either return your phone and walk away, or pay the remaining amount (amounting to 6 months) to receive it. If you choose to update at any time during this 18-month period, the clock will start over.

Also, this only applies to certain phones. This includes flagships like the latest iPhone, Galaxy S 6 Edge, LG G4 and more. T-Mobile has added new phones since the program’s inception, but it’s not a wide selection. It’s hard to say which phones will be available when you upgrade, and it can even be more difficult to find three phones a year that you might even want to upgrade to. Particularly if you use an iPhone, as Apple only releases a new line of phones once a year.

The main drawback is that you are basically wasting money on the phones you trade. If you want to use the Note 4 for six months, it will cost roughly $ 30 a month, for a total of $ 180. When you exchange this phone, this money will disappear. You have nothing to sell and you will start paying again on your new phone. If you otherwise resell or reuse your old phones, you will be wasting money every time you exchange them.

However, there are still some advantages here. First, you can leave T-Mobile at any time . Unlike most carriers’ plans, you don’t have to pay for a phone or pay a huge fee just to get away. You will have to hand over your old phone, but you do not need to immediately come up with a huge amount of money just to change your carrier.

Also, some people may just not want to sell their old phones. While buying and reselling your devices is a cost-effective way to stay up to date , it’s also a huge challenge. Your old phones may not sell for a high price, you will have to deal with online stores or sell them to friends, and it is probably best to keep all of the original packaging. If you know you’re not going to do all of this, then you won’t get any benefit from your old phones anyway. This rental program can at least keep you updated and your old phones will be more useful.

Option # 4: Redeem your phone right away

Yes, this is still an option. Like AT&T, T-Mobile has a GSM network, which means it’s easier to find a compatible phone. Plus, T-Mobile plans will cost the same no matter how you buy your phone. Whether you spend $ 500 on a phone on Amazon, or pay $ 20.83 every month for two years of T-Mobile, your cellular has a simple monthly cost so you never get confused.


With rare exceptions, T-Mobile’s plans are simple. You just need to pay for your phone. Funding is an easy way to do this. Bounce! it is almost the same as funding, except that you pay a premium to give yourself the opportunity to trade it. Jump! ideal for those looking to buy insurance for their phone anyway, especially if you are going to buy a phone that may not hold its value in the long run. If you decide that it is not worth updating and exchanging your old phone earlier, you do not need to. Just keep paying your monthly fees until your phone is paid, then save them. You will pay a little more than if you just bought device insurance, but this is a fairly small amount that you can choose from.

Bounce! On Demand is aimed at those who are quick to update their phones who will also not be selling and using their old phones. However, the limitation that phones do qualify for the plan makes it less attractive. In all fairness, the program has only been around for a month, and since then T-Mobile has added another new phone to the list, but this is not a wonderland where phones are constantly changing. Unless you’re hopelessly loyal to Apple or Samsung’s high-end phones, it’s probably best to wait with this plan right now.

Bottom line: T-Mobile’s plans, like AT&T, are a little convoluted, but generally fair. In almost any situation, you have the opportunity to immediately buy a phone if you decide to keep it for yourself, without additional commissions. Or you can upgrade it earlier, which is not very cost effective, but that is your choice. Only Verizon’s plans are simpler, but that’s also because they don’t have early update options at all. Sprint’s plans are significantly more difficult, and finding a decent deal is much more difficult.


Sprint currently offers many options for purchasing a new phone. The operator announced that it plans to phase out most of its options in favor of leases by the end of 2015, but there are a few days left until 2016, which has not happened yet. We’ll look at all the options that are available now and update them in the future when this plan finally ends. However, it’s all fucking confusing right now. Let’s start from the very beginning.

Option # 1: Rent out the phone for more than two years

Sprint lease will soon be the default, so we’ll start with that. You can rent a phone from Sprint for a specific amount per month for 24 months. It’s unclear exactly how Sprint calculates the monthly rental price, but it’s less than the formula other carriers use (total unit cost divided by 24). We’ll come back to this in a minute. At the end of your two-year lease, you have three options:

  • Turn on your old phone and update it: As long as your old phone is in good working order, you can return it and start a new rental.
  • Pay for the phone and get it: You can use the buy option to redeem the phone and keep it to yourself. This is usually between $ 150 and $ 200, although it is unclear if this amount is directly related to the price of the phone.
  • Keep paying your monthly rent: If you can’t decide which phone to upgrade to and don’t want to buy one, you can keep making your monthly rent payments. It’s unclear if they will count towards your purchase option if you decide to use it later.

Except for special promotions like the iPhone Forever plan , Sprint’s lease program doesn’t really seem much better than existing (but final) two-year subsidized contracts. You are still tied to the same phone number of the same operator for two years. However, at the end of the term, you will have to spend more money to own the phone.

The only area where you really save is in upfront payments. Subsidized plans often require you to pay a specific amount in order to qualify for a subsidy. Instead, you pay that cost (often up to $ 200) at the end of the program if you want to keep your phone. It looks like Sprint just moved that down payment to the end of your contract, not the beginning. However, this seems like a silly move where you can just get a slightly higher monthly payment and then get your phone at the end of the term.

In addition, Sprint rental programs are still not available on all phones. As we said earlier, Sprint planned to fully lease it by the end of 2015, but as of early 2016, many of the cheaper phones are not even eligible for the lease. The only way to get them is with either funding or a two-year contract.

Option # 2: Fund your phone with monthly payments

Sprint’s funding plan is called Easy Pay . Just like T-Mobile and Verizon, Sprint’s Funding Plan will charge you a set amount each month on top of your basic service plan. In most cases, this is pretty straightforward. The monthly fee is equal to the total cost of the phone divided by 24 months, although there are exceptions. Sprint still has subsidies (for now), however, so the question of how much you’ll pay for a phone can be tricky.

For example, Sprint currently sells the HTC One M9 for $ 27 a month on Easy Pay. Within two years, you will pay $ 648 for the phone (which you will later own). This is the same price you would pay if you buy your phone today. Whether you buy it directly or use Easy Pay, you’ll also be charged $ 60 a month for phone service.

However, Sprint is also offering this phone on subsidies. With a typical two-year contract, your total monthly price would be $ 85 per month, no matter what phone you have. That’s $ 25 more than the basic phone service you would pay if you bought your phone or used Easy Pay. In fact, you pay $ 25 per month for the phone itself. It’s a little cheaper than Easy Pay, right? However, the M9 also requires a $ 99 down payment. With that payment plus an additional $ 25 a month for two years, you end up paying $ 700 for the same phone over two years. It is also unclear if your monthly payment will be reduced at the end of those two years in line with the usual subsidized plan. Presumably, you will be able to get an off-contract target price if you ask, but it is unclear if this price adjustment will happen automatically.

In some cases, the difference between an Easy Pay plan and a typical subsidized plan can be quite significant. For example, the Galaxy S 5 will retail for just $ 15 a month through Easy Pay, bringing the total cost to $ 360 over two years. Meanwhile, the subsidized plan requires a $ 50 down payment and the standard subsidized plan price of $ 85 per month, which means you’ll end up paying an insane $ 650 for the same phone over two years. Even buying a phone directly from Sprint only costs $ 552. Not all Sprint phones have this wild incongruity. Specifically, the flagships at least had a consensus between the total funding cost and the full purchase price. However, during the few months these options remain available, it is still worth looking out for.

Option # 3: Buy a phone at discounted prices (you can still)

Sprint’s two-year contracts are still available for a while (though probably not too long). Functionally, they are not much different from Sprint’s funding plans, although their prices are standard. On a personalized plan, the service typically costs $ 60 per month. With a subsidized phone on a two-year contract, that monthly price is $ 85. Regardless of which phone you get under this contract, you will, in effect, pay an extra $ 25 per month for this phone.

As we discussed in the last section, choosing the “best” data plan depends on which phone you buy. Here’s a way to simplify the math:

  1. Divide the upfront cost of your subsidized plan phone by 24.
  2. Add 25 to this number.
  3. If the total is more than the monthly Easy Pay payment of the funding plan, choose Easy Pay. If not, take advantage of the subsidy.

For some reason, only a few of the phones listed on the Sprint site have the same price tag. As mentioned earlier, the older Galaxy S 5 had completely different prices for funding only and direct purchase. So be sure to check your math data for each phone to be sure.

Option # 4: Redeem your phone right away

As long as Sprint funding plans exist, direct buying can sometimes be a poor choice. As mentioned in Option # 2, there are some cases in Sprint where funding a phone for more than 24 months will actually cost less than the full price of the phone. In such rare cases, it is more financially wise to use funding.

Of course, you won’t be able to leave Sprint until your financing agreement is cleared. However, if you want to get a lower price while maintaining this freedom, you can terminate the financing agreement early. As with other carriers, when canceling, you must pay the remaining balance on your phone. If your monthly payments are below the full retail price, this may be an even cheaper (albeit more confusing) way to buy the phone directly. Just remember to take any activation fees into account as well.


Regardless of how you love to buy your phones, the sooner you can get a specific data plan with Sprint right now, the better. Funding and subsidies are ending, which means that soon the only way to keep your phone after two years is to pay $ 100-200 to buy it outright. Which, frankly, is not much different from paying between $ 100 and $ 200 when you first sign up, but it’s also much more difficult to get that much money on a two-year-old phone.

Subsidized data plans are still not ideal, and funding limits you until you pay for your device. However, given how Sprint sets prices for its devices, some phones cost less depending on which option you choose. Check the math for each device and see if you can close the deal in the long run. However, if you don’t want to stick with Sprint for at least two years, it’s probably best to avoid all three long-term options and just buy right away.

Bottom line: Sprint’s plans are the most confusing in terms of how they are structured, and their inconsistent pricing means you still have to do a little bit of math. Also, some of the best Sprint options should have disappeared by the end of 2015, but for some reason they still exist. If you really want a great deal with Sprint, update ASAP.

What about Apple’s iPhone updater?

If you’re an iPhone user, you’ve probably heard about Apple’s new Early Updates program. It works the same way as carrier upgrade programs: You go to the Apple store, choose an iPhone, and pay $ 32 / month (iPhone 6s) or $ 37 / month (iPhone 6s Plus). You get full AppleCare + coverage and can upgrade to the newest iPhone every year.

It’s a decent deal, but like carrier upgrade plans, you’ll probably save more money by buying an iPhone straight away every year and selling the old one , even if you include the cost of AppleCare +.

Don’t forget other carriers

This is basic information for each of the four major US carriers, but they are not the only ones. Remember: if you want to save money, non-contract operators have much lower prices for services if you are willing to compromise (for example, limited tariff plans or less roaming). You’ll have to buy your phone straight away every time, and there are no early upgrade or rental plans, but you can often save money in the long run compared to the Big Four. When doing the math, be sure to research other carriers and run them through the Prepaid Finder to see if they are a better deal overall.


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