For the personal finance tip of the week #41, we said one way to save money is not to upgrade your cell phone when you pay it off; and the reason is that your current device primarily works the same as new one and you can feasibly use it for another few years.
However, the cell phone companies have been offering incentives to new and existing customers. With 5G building out, the goal is to get customers on this platform and this is where the new phone models come into play.
For example, with T-Mobile you can get an iPhone 13 free now and with a forever upgrade and get up to $800 off your next iPhone every two years. (October 2021)
In my case, with Verizon, I received $1,000 for my iPhone 11 Pro Max and since I just paid it off, that trade-in covered the entire cost for a new iPhone 13. (October 2021)
The only thing that I paid was $90 for the tax and the service fee. Now with 5G, my phone bill will increase $10 per month; however, my overall phone bill dropped $36 since I no longer have a phone payment.
So here’s the deal: the future of the phone wars are uncertain yet it appears the business model is to give customers upgraded phones for free when new models arrive. The second part of the strategy is to make money on services as well as the current and future cost of 5G.
The thing to consider is that not buying a new phone will save you money overall; however, if you have the budget then these phones are a great option. In two years from now I still will not have a phone payment.