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Apple's iPhone Upgrade Plan: Is It a Good Deal?

Last year, Apple released its iPhone Upgrade program—which is designed for "gotta have it now" fans of the iPhone. Basically, if you’re excitedly waiting for the iPhone 7 to come out, you’re their target market.

Under the plan, Apple lets you lease the newest, hottest iPhone for $32 to $45 per month, depending on which model you have.

Every 12 months, you have the opportunity to trade your current phone for the newest model, starting the leasing cycle all over. As part of the deal, you have to trade in the phone—you can't sell it on the open market. If you decide not to upgrade, you will own your phone at the end of 24 months for a total cost of $778-1,079.

Mike Gikas is a senior electronics editor at Consumer Reports, and he’s not sold on the idea that the upgrade program is a good deal. He told ABC News, "The leasing program may seem like Apple is doing consumers a favor, but it's really an effort to ensure people buy new phones or continue paying more for the old one if they decide to hold on to it."

The upgrade program also requires you to have a strong credit score and to sign a loan contract—all to basically rent your phone permanently. Oh, and you must have a credit card to sign up. Debit cards won't cut it, according to Apple’s lease agreement.

If you know our thoughts on leasing a car, then you shouldn't be surprised to hear our thoughts on leasing an iPhone: Don’t do it!

Look, it’s a great business model for Apple. They get a continuous stream of revenue. They get you hooked, then keep you coming back. You sign lease after lease and pay month after month, and you never even own the phone (unless you stop upgrading)!

Our advice: Take a breath. You can own a nice, new smartphone without getting ripped off by leasing programs and crazy expensive launch day prices. With a little patience, you can still find a good deal and a great smartphone that does everything you need it to do.

Here are some practical ways to make that happen:

  • Love the one you’re with. Ask yourself why you want a new phone in the first place: Is your current phone working? Do you just want something shiny and new? Are you experiencing a serious case of techy FOMO (fear of missing out)?
  • Save up before you buy. If your current phone is on the fritz, you probably do need to find a replacement. But you can usually deal with the issues for a few months while you save up for a reliable phone. You don’t "deserve it" if you can’t afford it.
  • Buy used. There are plenty of ways to get a great phone for cheap. Check with colleagues, church friends and family members to see if anyone has an older-model phone that’s just sitting around in a drawer. If that doesn’t pan out, try online sites like Swappa, Glyde or Gazelle.

Leasing never makes sense—no matter what you’re buying. Because you don’t own your stuff! Your money is just wrapped up in payments. And even when you do own it after 24 months, the process starts over again with a new phone and new lease. Talk about a vicious cycle!



Find a phone you can afford to buy, not to rent. That just makes good sense.




Start budgeting with EveryDollar today!

If you’re caught in a cycle of leases, trying to get out can feel overwhelming. The first step to taking control of your money is learning how to budget. And we’ve got the resources to help you make it happen! Click here for more information about budgeting.

iPhone® is a registered trademark of Apple Inc. There is no material connection between our companies. Apple did not sponsor or pay for any advertising and the statements made in the article do not constitute an endorsement of Apple's business, products or services by Ramsey Solutions.

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Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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