GoKawiilWith phone prices climbing higher than ever, it’s no wonder most people turn to carrier financing to buy a new phone. Not only can you spread out your payments over time, but cellular companies often offer enticing deals to win customers over, especially if you’re switching to a new provider. Depending on the deal, sometimes you can even get your new phone for free.
But those deals can be a little confusing, and involve caveats and rules that aren’t always clear. Very rarely is a discount given without a catch. You might also come across terms like “bill credits” or “trade-in credits” that you don’t fully understand.
If you want to know what these terms mean or other details, like what happens if you decide to switch carriers midplan, read on as we walk you through what you need to know before accepting a new carrier deal.
This article was made possible in part by T-Mobile. It was written and edited independently without partner oversight.
What is carrier financing?
Wireless providers often have financing deals for new phones, versus paying for a new device upfront. Sarah Tew/CNET
Simply put, instead of paying up front for a new phone, carrier financing lets you pay for the phone over time through an installment plan. So, for example, if a phone is $1,200, you can spread the cost over 24 months, which translates to just $50 a month. That’s a lot easier for most people to manage.
It’s worth noting that you will still need to pay upfront costs, like activation fees and taxes on the new phone, whether you’re on an installment plan or not. Sometimes carriers do offer deals that let you spread that out over time. T-Mobile, for example, has the Equipment Installation Plan Flex 36 that will spread out the payment of the device, fees and taxes over 36 months, making the initial cost zero. That said, you still need to qualify for the plan, and depending on your credit, you could have to pay interest on top of that.
One particular downside of carrier financing is that it locks you into that carrier for an extended period (usually two to three years). This means you can’t use your phone with another carrier during this time. If you want to end your agreement with the carrier, that will usually result in early termination fees, or ETFs.
Being stuck with a carrier-locked phone is sometimes bad news if you travel a lot and want to use international eSIMs, which only work with unlocked phones. Otherwise, you’ll have to use your carrier’s international data plan, which can be more expensive.
... continue reading