Should I sign up for Apple’s iPhone Upgrade Program?

Is anything more exciting than unboxing a new iPhone? Waiting for the lid to slide off as it builds the perfect level of anticipation. If you sign up to Apple’s iPhone Upgrade Program you can experience that joy every year. But is it worth the cost?

Working out the financial details of an iPhone purchase can be a real headache. The pros and cons, the hidden expenses, the ongoing payments. It’s a lot to consider, especially with the broad range of purchase options available on Apple’s website!

That’s why we’re here to help. 

In this post, we’ve explained everything you need to know about the most intriguing of those options: the iPhone Upgrade Program. 

What is it? How much does it cost? Is it a good idea? We’ve tried to keep things as simple as possible since it’s our aim to help you make the best decision you can. That said, we ought to start with a warning…

We aren’t financial advisors. Please use the information below to better understand the iPhone Upgrade Program, but conduct your own research as well.

And as always, don’t buy what you can’t afford!

Related:

• Apple’s 2019 iPhone Lineup: Three Models, Face ID 2, Bilateral Charging, and Improved Technologies; 5G and Redesign in 2020
• Looking Ahead at iOS 13 – What Apple Needs to Bring to the Table
• Ready to order the new iPhone X? Here’s what you should know
• AppleCare+ now has optional Loss and Theft protection, here’s what you should know

What is the iPhone Upgrade Program?

Apple’s iPhone Upgrade Program lets you get the newest iPhone every single year by paying a zero-interest monthly fee. What’s more, your iPhone is always covered by AppleCare+ and it works with any mobile carrier.

Essentially, Apple offers you a zero-interest loan for the price of your new iPhone and AppleCare+. You then pay off this loan in 24 monthly installments, without any added costs. 

After the first 12 payments, you can upgrade to a new iPhone and start a new 24-month plan. 12 months later you can upgrade again. And again. And so on.

If you don’t want to upgrade, just keep paying the monthly fees until you finish the 24-month period. You only need to finish paying for the last iPhone you got, which means you can get out of the plan 24 months after your last upgrade.

When you’re all paid up, the iPhone is yours and you can do what you want with it. Sell it, keep it, fashion it into a shrine to the Apple gods.

Which iPhones can I get?

Apple designed the iPhone Upgrade Program so that customers can get the newest iPhone each year. That means you can’t get older models through the program. So now the iPhone XS is out, you can’t upgrade to an iPhone X.

Apple normally releases a selection of iPhones together, and traditionally any of them are available for upgrades. For example, at the time of writing this, the following iPhones are available for the iPhone Upgrade Program:

• iPhone XR
• iPhone XS
• And the iPhone XS Max

And of course, each year there are new releases that you can keep upgrading to.

What’s the catch?

It seems too good to be true, doesn’t it? Well, it’s not a bad offer but there are a couple of slight complications to consider.

1. You must buy AppleCare+

The iPhone Upgrade Program must include AppleCare+, you can’t sign up without it. 

Now, AppleCare+ isn’t necessarily a bad thing to have. But it is an extra expense if you wouldn’t buy it otherwise. And there’s no way around that.

We’ve written more about AppleCare+ in other posts. But essentially, it costs $149–$199 and gives you the following benefits:

• A two-year warranty, instead of Apple’s standard one-year offering.
• Coverage for up to two cases of accidental damage, each subject to an excess fee.
• And 24/7 online and over-the-phone support.

You could also choose to pay $100 more to get additional coverage for theft and loss, although it has an even higher excess.

AppleCare+ isn’t the cheapest or most comprehensive insurance around. But it is provided by the Apple themselves so you know you won’t get a dodgy repair. It’s also easier to deal with Apple than with most insurance companies.

2. You’re stuck in the Apple ecosystem

We all know Apple devices don’t play nice with others. It’s not awful, Apple arguably offers the best ecosystem around, but if you don’t want to commit to iPhones for at least the next two years then the iPhone Upgrade Program isn’t for you.

This is probably Apple’s biggest motivator for offering the iPhone Upgrade Program. The more people they persuade to sign up, the more people who are likely to keep buying new iPhones every year. Which makes them likely to buy other Apple products.

Sure, you can change carriers whenever you want — unlike the rival programs offered by AT&T or Verizon — but you can’t stop getting iPhones. Not unless you stick with your latest upgrade for two years and finish the 24-month payment plan.

3. You need to pass a credit check

To sign up for the iPhone Upgrade Program, you need to pass a credit check. That means if you’re only considering the iPhone Upgrade Program because you can’t afford an iPhone otherwise, it might not even be available to you.

Of course, it’s easier for anyone to pay for an iPhone over 24 months than to pay for it upfront. But it’s worth assessing your finances to make sure you have enough money left over to afford the payments each month.

The credit check is run by Citizens One. And they might use a soft or a hard pull on your details, which means if you fail the credit check it could affect your credit score in the future. 

If you’ve got a lot of outstanding debt, low income, or high outgoings, you might not pass the check. In which case, you might be better off waiting until it improves.

How much does the iPhone Upgrade Program cost?

The cost of your monthly payments depends on which iPhone you get, and which level of AppleCare+ cover.

The iPhone Upgrade Program doesn’t add interest. So you can easily work out the cost of your payments yourself. Look at the total cost of the iPhone and AppleCare+, then divide by 24 monthly payments. Et voila!

Let me walk you through an example:

iPhone XS, 64GB, Space Gray = $999

AppleCare+ for iPhone XS = $199

Total = $999 + $199 = $1,198

Monthly Payments = $1,198 / 24 = $49.91

Actually, it’s 0.6¢ more than that but Apple rounds down!

Of course, a different iPhone — like the iPhone XR — or a different level of AppleCare+ — like the theft and loss option — would give you a different monthly payment.

Are there any hidden fees?

There isn’t any interest on the loan, so you never pay more than the full price of the iPhone had you paid upfront. 

However, there are a couple of extra expenses that aren’t always clear from the monthly payments listed on Apple’s website: sales tax and carrier costs.

1. Sales tax is expected upfront

Sales tax is due upfront when you get a new iPhone from Apple. 

Of course, the amount of the tax varies from state to state, so it’s impossible for me to say exactly how much it is. But the percentage is calculated on the total cost of your iPhone and AppleCare+. Not on your monthly payments.

You should also remember you need to pay sales tax again when you upgrade your iPhone. It’s a smart idea to keep some money aside for the sales tax when that day comes. That way you can upgrade straight away!

2. Don’t forget about carrier service costs

The iPhone Upgrade Program gets you a brand new iPhone with AppleCare+ coverage. It doesn’t get you a SIM card or carrier service contract.

That means you still need to pay for a monthly carrier contract to get texts, minutes, and data on your SIM card. But you don’t need to wait for your existing contract to end to sign up to the program. 

If you’ve already got a carrier contract and an active SIM, just put it in your new iPhone when you sign up for the program. Provided it’s the right size SIM card for your iPhone.

If you don’t have an active contract or SIM card, you should sort that out first. You can’t activate a new iPhone without a SIM card.

Can I trade in my existing phone?

If it’s an iPhone: absolutely. If it’s anything else: not quite. 

When you sign up for the iPhone Upgrade Program you can trade in your existing iPhone to reduce your monthly payments. The value of your iPhone, according to Apple, is taken off the total purchase cost before dividing it by 24 to get your payments.

If you don’t have an iPhone you can’t reduce your monthly payments, but you can still trade in for an Apple Gift Card.

Apple’s trade-in service lets you trade in smartphones, tablets, computers, or smartwatches in exchange for Gift Cards. The amount you get changes all the time. And for some devices, Apple only offers to recycle it for free.

The catch with the Gift Cards is that you can’t use them to pay off your iPhone Upgrade Payments. You must sign up with a valid credit or debit card for your monthly payments. 

However, you can use your Gift Card to get other accessories from Apple instead. Stuff like a case, screen protector, or some AirPods would go very nicely with a new iPhone.

Can I upgrade my AT&T iPhone? 

A lot of people ask this question whether they’re currently with AT&T, Sprint, Verizon, T-Mobile, or other carriers. The answer is yes, you can upgrade any iPhone at the Apple Store. However, you will still be liable for any unpaid payments on that device.

This means that if you’re midway through a two-year iPhone contract with AT&T, you can trade in your iPhone to join the iPhone Upgrade Program, but you still have to pay the rest of your AT&T contract. And now you also have to make payments to Apple.

If you’ve already paid off your phone and can cancel the contract, do that. Or at least make sure your payments are reduced to SIM-only rates.

Is there an installment plan for the iPhone Upgrade Program?

The iPhone Upgrade Program is an installment plan, but it’s a fixed 24-month period.

The total price you pay through the program is the same as the upfront cost of your iPhone with AppleCare+. It’s just broken down into 24 equal monthly payments, or installments, with no added interest.

How do I sign up for the iPhone Upgrade Program?

You can sign up for the iPhone Upgrade Program at an Apple Store, on Apple’s website, or using the Apple Store app.

Go to the checkout as you normally would, choosing the iPhone and configuration you want. But make sure you’re buying one of the newest iPhones to be eligible for the program. Also, select one of Apple’s four partnered carriers for activation:

• AT&T
• Sprint
• T-Mobile
• Verizon

You can then see the iPhone Upgrade Program as a payment option. Select it and fill in your personal and payment details. You need to pass a credit check first.

And remember to make a backup of your existing phone before trading in or selling it!

What do I need to have?

The credit check means you must be at least 18 years old to sign up for the iPhone Upgrade Program. You also need to provide the following information when you sign up:

• Social Security Number
• Date of birth
• To sign up in an Apple Store, you also need your:
  • Driver’s license / State-issued ID
  • Credit or Debit card / Passport / Military ID / Recent utility bill / Birth certificate

How do upgrades work on the iPhone Upgrade Program?

Signing up for the iPhone Upgrade Program means you’ve agreed to spend at least the next 24 months paying for an iPhone. What makes it different from the Apple iPhone Payment plan is your option to upgrade after only 12 payments.

When you upgrade you exchange your current iPhone a new one and start a new 24-month payment plan. You don’t need to finish paying off the original iPhone since Apple takes it back from you.

When can I upgrade my iPhone?

You can upgrade after 12 payments toward your iPhone. Notice the wording there: 12 payments and not 12 months. In fact, you can upgrade after only 6 months providing you’ve paid the equivalent of 12 payments.

You could pay this in a lump sum at upgrade time, or you could pay double for the first six months. Either way, you’ll have paid the same amount.

Of course, that means that if you sign up to the iPhone Upgrade Program as late as March. You could still upgrade to the new releases in September! So there’s no need to wait for a perfect time to join the program.

How much does it cost to upgrade?

There isn’t an upgrade fee, but you do need to pay sales tax on your new iPhone at the time of upgrade. This varies from state to state and is worked out based on the full cost of your iPhone and AppleCare+, not your monthly payments.

It’s also worth mentioning that if you upgrade to a more expensive iPhone your next monthly payments will be higher. At the same time, those payments will go down if you upgrade to a cheaper iPhone — one can dream!

What if my iPhone is damaged?

That’s where AppleCare+ comes in. You can’t upgrade a damaged iPhone, but since it’s covered by AppleCare+ you’ve got a full warranty and protection for up to two cases of accidental damage.

If you want to upgrade your damaged iPhone, you need to repair it first. That might mean paying an AppleCare+ excess to fix accidental damage. If you’ve already used your two incidents of accidental damage, you need to pay the out-of-warranty repair fee.

Once your iPhone is repaired, you can upgrade it as normal.

Do I get to keep my iPhone when I upgrade?

No. You only get to keep your iPhone when you choose to pay off the full 24 months. When you upgrade, your current iPhone is exchanged for the new one.

Think of it as a trade-in for whatever you’ve got left to pay on that iPhone.

So if your original iPhone and AppleCare+ cost $1200. After 12 months you’ve paid half of it, with $600 left to pay over the next 12 months. When you upgrade, Apple takes your iPhone and writes off the remaining balance. 

If I don’t upgrade at 12 months do I pay more?

Yes, you pay more, but you also have your iPhone for longer. So it kind of balances out. The important things to weigh up are how much you have left to pay off versus how much you could independently sell your iPhone for.

If you’re 23 months through the plan and your iPhone with AppleCare+ cost $1200, you’ve only got $50 left to pay. If you upgrade now, that’s all you get for it from Apple. 

Yet you could quite easily sell a two-year-old iPhone for more than $50. In this case, you’re better off paying the final month and selling your iPhone independently. Then use that money towards a new upgrade.

However, if you’re only 18 months through the plan, you’ve still got another $300 to pay off. Depending on the condition of your iPhone it could be harder to sell it for more than that. Or the extra profits you make might not be worth the effort.

Look on eBay at used iPhone auctions to get an idea of what prices your device goes for. Sort by ending soonest and make sure the iPhones you’re looking at actually have bids on them!

How do I upgrade my iPhone?

Visit the iPhone Upgrade Program webpage to check your upgrade eligibility. It makes sure you’ve been on the plan at least six months and made the equivalent of 12 payments.

You can then choose to upgrade through the website itself, on the Apple Store app, or by visiting an Apple Store. Choose the next iPhone you want and your level of AppleCare+ coverage to determine your continuing monthly payments.

The same as when you joined, you need to have an account with one of Apple’s four partnered carriers to activate your iPhone. You also need to confirm your personal and payment information.

Finally, wait to receive your new upgrade. If you’re in store this should be straight away. Otherwise, you get a delivery estimate when you request your upgrade. Deliveries come with a trade-in kit for you to send your iPhone back in.

Remember to make a new backup to iCloud or iTunes before trading in your iPhone!

Which carriers can I use the iPhone Upgrade Program with?

iPhones from the iPhone Upgrade Program work with any carrier. However! When you sign up for the program or upgrade your device, you need to activate your iPhone through one of Apple’s partners:

• AT&T
• Sprint
• T-Mobile
• Verizon

This feels a little bit contradictory. And it is a bit. Technically, after you activate your iPhone, you can change the SIM to any other carrier. But to get that far you need to have an account with one of the four listed above.

For simplicity, it’s easiest just to stick with one of those carriers. Which is why they’ve partnered with Apple to do it.

Are the iPhones unlocked?

Yes. Any iPhone you buy directly from Apple is unlocked. And that includes the devices you get through Apple’s iPhone Upgrade Program. This means they work with any mobile carrier.

After activation with one of Apple’s four partnered carriers, you can swap your SIM card to anything you want and it will work.

What other payment options are there?

You’re possibly only reading this because you were baffled by the range of payment options available on Apple’s website.

• Apple iPhone Payments
• AT&T Installment Programs
• Verizon Device Payment Program
• One-time payment
• Or the iPhone Upgrade Program.

There are a lot of choices, and it can be more than a little confusing. We’ve explained each of the options with a comparison below.

Apple iPhone Payments

Although it sounds very similar to the iPhone Upgrade Program, Apple iPhone Payments differs in a few very important ways:

• All iPhones are available on it
• You don’t need to buy AppleCare+
• You don’t get an option to upgrade after 12 months.
• Apple rounds up the monthly payments to the nearest 99¢!

Other than that it’s basically the same zero-interest, 24-month loan. Your monthly payments are less because you don’t need AppleCare+, but the extra rounding up makes the other alternatives below more appealing.

You could still choose to upgrade your iPhone after 12 months, but it would depend on your selling it privately and using the money to pay off the remaining 12 months of your loan. 

This is essentially what happens with the iPhone Upgrade Program, except now you don’t have the guarantee that you can sell your iPhone for 50% of its original cost. Also, since you don’t have AppleCare+, it costs more to repair if you damage it.

AT&T Installment Programs

There are two installment programs available with AT&T: 

• AT&T Next 
• Or AT&T Next Every Year.

Both options offer a zero-interest loan with the option to upgrade part way through. Since the deal is provided by AT&T, you don’t need to upgrade to another iPhone every year. You could try Google or Android instead. But you are stuck with AT&T.

If you cancel your AT&T service, they expect you to pay the remaining balance on your device in full.

1. AT&T Next

This plan offers the lowest monthly payments because the term is stretched out to 30 months. That doesn’t mean you’re paying less overall, just that you’re paying the same amount over a longer period of time. Which means you can’t upgrade as frequently.

After you’ve paid off 80% of your device, which is 24 months, you have the option to upgrade. Now, this means AT&T is only giving you a 20% trade-in value for your two-year-old phone. You can probably get more than that on the independent market.

2. AT&T Next Every Year

This plan is identical to the iPhone Upgrade Program, except you’re tied to AT&T instead of Apple. And you don’t need to get AppleCare+.

The cost of your iPhone is spread across 24 months, and you can choose to upgrade after the first 12 months. When you do this, another 24 month period starts.

Verizon Device Payment

Once again, this plan is the same as the iPhone Upgrade Program — without a requirement for you to buy AppleCare+ — but ties you to Verizon instead of Apple.

The cost of your iPhone is spread across 24 months, and you can choose to upgrade after the first 12 months. Since you’re with Verizon, you could upgrade to a Google or Android device instead.

Like with AT&T, if you cancel your Verizon service you need to immediately pay off the rest of the phone, so you’re tied to Verizon for the duration of the plan.

Which is the best?

This is a great question, and the answer depends on what you want. Since this is a post about the iPhone Upgrade Program, for which the main selling point is yearly upgrades, I assume that’s what you’re after.

The next question is one of brand loyalty. Whichever plan you choose, you’re tied to them for at least two years: Apple, AT&T, or Verizon. Who do you feel safest with?

If you cancel your service plan with AT&T or Verizon you need to pay the remaining balance on your smartphone in the next monthly payment. Whereas Apple lets you change to a different service provider anytime, you just need to stick with iPhones.

And finally, are you accident prone? Do you feel you need to get AppleCare+? Your new iPhone already has a one-year warranty, and if you upgrade every year you don’t need more than that. But AppleCare+ protects it against accidental damage.

If you don’t want AppleCare+, the iPhone Upgrade Program is out. Since it’s a non-negotiable purchase and makes your monthly payments substantially more costly.

If you still want to stick with Apple but don’t want AppleCare+, the Apple iPhone Payments are probably your best option. This way you need to independently sell your iPhone when you upgrade. 

Just make sure you get enough from the sale to pay off the remaining balance with Apple, then start a new payment plan with the next iPhone you want.

Is the iPhone Upgrade Programme different in the UK?

First of all, it’s spelled iPhone Upgrade Programme. Weird right? But that isn’t the only difference for Brits:

• There’s no upfront sales tax to pay, but you do make an upfront payment of £69 that comes off the total cost of the iPhone.
• The loan is financed through Barclays bank instead of Citizen one.
• You get an unlocked iPhone, just like the US, but you don’t need to have an account with any particular carriers to activate it. You’re totally free to choose any carrier.
• There’s no option to add Theft and Loss coverage to your AppleCare+.
• And finally, you can only sign up in an Apple Store. It’s not available online or through the Apple Store app.

That seems like a few differences, but the gist of the program(me) is the same. You get a zero-interest loan for your iPhone with the option to upgrade every 12 months.

Should I sign up for the iPhone Upgrade Program?

The iPhone Upgrade Program is a good option if you want to have the newest iPhone every year. To simplify things further, we’ve made a short list of pros and cons.

Pros of the iPhone Upgrade Program

• It’s a 0% interest loan spaced out over 24 relatively low payments. 
• You aren’t tied to a single service provider since the iPhone is unlocked.
• There’s no need to worry about selling your iPhone independently to upgrade.
• You can upgrade in as little as six months if you want to pay off half the iPhone.
• Your iPhone is protected against accidental damage for the duration of the plan.

Cons of the iPhone Upgrade Program

• AppleCare+ is an expensive requirement you may not feel you need.
• You need to pass a credit check and budget for another monthly payment.
• You’re tied to Apple and can’t easily change to a different smartphone.
• You still need to pay sales tax upfront when you join or upgrade.
• You need an account with one of Apple’s partnered carriers to join or upgrade.

Whew! That just about covers it. We hope this post has been helpful. Let us know your iPhone Upgrade Program questions in the comments and we’ll be sure to get the answers you’re looking for.