The math they don’t want you to see: iPhone carrier trade-ins are always a bad idea

iPhone Trade In Deals

Smartphone trade-in programs are big business for wireless carriers. Through these programs, customers are offered a seemingly generous discount on their next smartphone purchase when they trade in an older model. Then the old phones are polished up and resold at a profit as refurbished devices to other customers looking to save money by buying used phones.

While these programs are indeed smart business for the companies on the receiving end of your old handset, they’re always a bad idea for consumers and we’ll show you why.

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Programs like AT&T Next, Verizon’s upgrade plan and the rest of them offer subscribers a nice way to upgrade to a new smartphone model quickly and easily.

It all seems so simple. Just keep paying the same monthly fee and you can have a new phone each year when it’s released. Want an iPhone 6s but you just bought an iPhone 6 last year? No problem, just trade in your 6 and you’re out the door with a 6s.

Here’s the thing: You will never — never, ever — get as much value out of your old phone from your wireless carrier as you will elsewhere.

Companies launched these programs because they stand to benefit from them tremendously. They’re not doing customers any favors here. If convenience is your sole concern and you don’t care at all about getting the most bang for your buck, then by all means, trade in your old phone with your carrier. But if you’d rather get as much money as possible for your old smartphone, there are several better ways to go.

And by the way, these programs aren’t even always more convenient than selling your old handset privately.

To experience a carrier trade-in program for myself, I traded in an old iPhone 6 when upgrading my wife’s line on my AT&T account to an iPhone 6s. It seems straightforward enough; just buy your new phone and use the prepaid shipping label they give you to mail in your old one.

Well guess what: AT&T never received the old iPhone 6 that I sent them and the company tried to charge me for it. In fact, I did get charged for the phone on my bill. I was ultimately able to have the charged reversed but it took almost a dozen stressful phone calls over the course of nearly three months to finally get the matter taken care of.

It was awful, and it wasn’t convenient at all. Fortunately, my experience was an outlier. But the fact remains — even if my trade-in had gone smoothly from start to finish, I still would have lost out on a substantial amount of money by sending my phone to AT&T instead of selling it privately or even using a third-party buyback service.

Flipsy is a website that helps smartphone owners sell their used handsets. The company works with a number of partners sites that purchase used phones, and it allows consumers to comparison shop using a simple search mechanism.

I went to the site to see how much cash one might get for a used 16GB iPhone 6 in Space Gray that is locked to the Verizon network. According to Flipsy, the best cash offer for the phone in perfect condition is $320. And if sold on the private market through a site like eBay or Craigslist, Flipsy says that the phone would be worth an average of $416 before fees and shipping, or about $354 after those costs are factored in.

Now, what would happen if I tried to trade that same phone in with a carrier? According to data from Flipsy, carriers would pay an average of just $238 for that model, and I would get it as a store credit rather than cash. Broken out by company, Verizon would pay $251, AT&T would pay $215, Sprint would pay just $200 and T-Mobile would give me $286 toward a new phone that I purchase in a T-Mobile store.

Here’s another example using a 16GB Verizon iPhone 6 Plus:

In-store trade-ins

  • Verizon: $270 credit
  • AT&T: $250 credit
  • Sprint: $225 credit
  • T-Mobile: $286 credit
  • Carrier Average: $258

Private Buyers (via Flipsy.com)

  • Private Market: $455
  • Private Market, Adjusted: $387 (40 percent greater than average carrier offer)

Buyback Companies (via Flipsy.com)

  • Buyback Credit: $327 (24 percent greater than average carrier offer)
  • Buyback Cash: $350 (30 percent greater than average carrier offer)

In other words, by choosing to be smart instead of opting for the convenience of using a carrier trade-in program, one could have earned as much as $162 more for that old iPhone 6 Plus by selling it privately. According to Flipsy’s data, consumers will make an average of 53% more by selling their old phone privately than they will at a carrier store, and third-party buyback companies will pay an average of 41% more.

“Customers should do their research before being lulled into carrier trade-in offers,” Flipsy said in an email. “The private market offers the greatest payouts, but also the least convenience. Buyback companies offer the greatest convenience plus higher store credit and cash payouts.”

Of note, Apple’s own trade-in program comes the closest to matching private market values and sometimes it even tops the amount of cash third-party buyback companies offer. But that money must be collected as a store credit, so it’s only a good option if you plan to purchase a new phone from Apple.

The bottom line is this: Regardless of your situation, it’s always a better idea to sell your phone than it is to use a carrier trade-in program.

If you’re switching to a new carrier and you want to trade in a phone to use the credit toward your new purchase, don’t. Sell the phone privately or to a buyback service. And if you’re on a plan like AT&T Next, you always have the option to buy the phone outright instead of trading it in towards new model. Take that option and then sell the phone on your own — you’ll always come out ahead.

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