Keeping Your Phone Longer Saves You Money

Kevin Brasler, executive editor of Washington Consumers’ Checkbook, advises consumers to stop replacing their cellphones every year. He argues that the current trend of annual upgrades is a poor financial decision for most people. Brasler points out that while the latest models are appealing, they rarely offer enough value to justify the cost.

The three major U.S. carriers, AT&T, Verizon, and T-Mobile, all promote plans that allow customers to trade in their current device after paying off a portion of its price. Brasler notes that these programs often use marketing language like 'free phone offers' to encourage upgrades. However, he explains that these deals function more like leases. Customers end up paying for a new device costing over $1,000 for two or three years before having to trade it in, rather than owning the phone outright.

Brasler observes that the technical changes in new phones have become much smaller over the last two decades. Since the release of the first iPhone in 2007, yearly updates have been incremental. He states that the improvements are often too subtle to notice in daily use. Because of this, he does not believe the extra cost of a new model is worth paying for.

The financial difference is clear when comparing ownership methods. If a consumer buys a $1,000 phone and keeps it in good condition for one year, they can sell or trade it privately for between $500 and $700. In contrast, a customer using a carrier upgrade plan pays down a large part of that $1,000 in the first year and then returns the device. If this cycle repeats for three years, the consumer has paid for service and financing continuously but never owns a fully paid-off device to keep or sell.

Brasler recommends holding onto a phone for at least two, three, or four years. This approach allows the device to be fully paid off while the customer still owns it. At the end of that period, the consumer might be able to sell the phone for a few hundred dollars. By avoiding constant upgrades, people stop paying for a new phone all the time.

The expert suggests that this shift in habit saves money by letting consumers retain the value of their hardware. Instead of trading in devices while they still hold equity, users can wait until the loan is finished. This simple change avoids the cycle of perpetual debt associated with modern carrier plans.