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Apple iPhone upgrade program: Here's how it works

Get a new iPhone every year.

apple-event-2018
Apple

New iPhone models are on the way -- read about the iPhone XS, XS Max and XR here -- making it a good time to review Apple's iPhone Upgrade Program. 

Two-year contracts and the subsidized-but-still-sizable up-front charges for a new phone are a thing of the past. Now, the carriers and Apple let customers finance their phones for a set installment each month. Apple's upgrade program lets you upgrade to a new iPhone every year. Let us review.

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How does the iPhone Upgrade Program work?

You buy an iPhone from Apple -- from an Apple Store in person, Apple's online store or the Apple Store app -- and agree to pay off it off over 24 months. But after making half of those payments, you are eligible for a free upgrade. After 12 months, you can trade in your current phone for a new model. The clock starts again on the 24 months of payments and eligibility to upgrade after making 12 of them. 

iPhone X owners will need to make a payment to upgrade because it was released in October of last year, putting you one monthly payment short if you want to grab one of the new models when they start shipping later this month.

Why buy from Apple instead of a carrier?

Apple sweetens the deal by throwing in AppleCare+ coverage, its insurance and extended warranty program that would otherwise cost $149 or $7.99 a month. You might pay a few dollars more per month for Apple's upgrade program than for a similar installment plan from a carrier, but you miss out on AppleCare+.

AppleCare+ doubles the standard one-year warranty to two years, but that's less of a concern if you are planning on trading in your phone after the first year. The real value of AppleCare+ is getting accidental-damage protection. You get two accident claims that'll replace your phone (each carries a $99 charge, but that's cheaper than buying a new phone). You'll also be able to replace a cracked screen or two for $29 per incident. Phone support is also extended to two years with AppleCare+, up from the standard 90 days.

How much does it cost?

Pricing ranges from $37.41 a month for the 64GB iPhone XR to $68.66 a month for the 512GB iPhone XS Max

apple-upgrade-program-2018
Screenshot by Matt Elliott/CNET

How do I pay?

You'll need a credit card to sign up, at least in the US. In the US, Apple uses Citizens Bank for the installment loan, and it requires a valid, US-issued credit card to be eligible.

Is there an age limit?

Yes. Sorry, kids, you need to be 18 years old to apply. (When you see the prices for these new iPhones, I hope you will start being nicer to your parents.)

How do I trade in my current phone?

You can take it to an Apple Store and make the swap there, but you can also save the trip and buy from Apple's online store or the Apple Store app. When you order an iPhone online from Apple, it'll arrive with a trade-in kit so you can package up your suddenly outdated phone and ship it back to Apple. You need to get it back to Apple within 14 days.

What if my current iPhone is banged up?

According to Apple, your current iPhone needs to be in "good physical and operational condition." That means it should:

  • Be able to power on and hold a charge
  • Have an intact and functioning display
  • Have no breaks or cracks

I haven't made 12 payments yet on my current phone -- can I still upgrade?

Yes, but it'll cost you. If you've made at least six monthly payments on your current phone, you can pay the difference between your current balance and the total for 12 payments to fast-forward the clock and get a new iPhone.

Do I need to upgrade?

No, not all at! You are not forced to upgrade. If you are happy with your current phone, you can keep using it and continuing to pay it off. After 24 months, you will have paid it off and can continue using it without the monthly payment, or you can turn around and sell it to help finance the cost of a new phone when you're ready.

Originally published on Sept. 12, 2017.
Update, Sept. 13, 2018: Added information about new 2018 iPhone models.

Everything Apple announced at its Sept. 12 event: Our exhaustive roundup.

iPhone XR, XS, XS Max: Apple's three new iPhones start at $749.