The iPhone 7 is here, and that means carriers are scrambling to offer you ways to upgrade your phone. The most popular deals right now include free or drastically discounted iPhone 7’s. There’s a catch though.
AT&T, Verizon, T-Mobile, and Sprint are all offering a “free” 32GB iPhone 7, along with discounted versions of higher storage models and the iPhone 7 Plus. There’s just one problem: all of them require you to keep the phone and your contract for 24 months and require you to trade in a newer phone, like an iPhone 6 or 6s. T-Mobile calls this a “no-cost 24 month finance agreement.”
Basically, you’re giving the carrier your old phone for the privilege of getting an iPhone 7 with no up front cost. However, if you leave the carrier within those two years, you have to pay off the phone, minus what you’ve been credited. If you leave you do not get your old phone back, nor do you get any sort of credit for your old phone, which means that cutting out early is an extremely bad idea.
If this all sounds familiar, The Verge points out that it’s because these free plans look a heck of a lot like a two-year contract. It’s not exactly the same because you’re not signing anything, but the end result is the same: carriers want to lock you into their service for as long as possible. If you like your carrier, this isn’t a big deal, but it’s still worth noting.
Also, all of these deals work by crediting your account monthly the amount you would be paying if you were paying off the iPhone 7 in installments each month, and those credits don’t start right away. This means for the first couple of billing cycles, your bill will be higher than normal.
Verizon says it’ll take two or three billing cycles before credits are applied, Sprint says within two invoices, AT&T warns it’ll take up to three months, and T-Mobile says credits won’t appear until the second bill cycle. Obviously these credits roll back around after 24 months, but it’s still a potential sticker shock if you’re not reading the fine print.
So, what’s the financially wise choice for you if you want that iPhone 7? It’s complicated, changes depending on which phone you have right now, and depends on how comfortable you are with what’s essentially a two year contract. Our friends over at Gizmodo break down a bunch of options.
Regardless, no matter how you cut it, there’s no free iPhone 7 here.