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iPhone 7 for free? There must be a catch

These free offers are little more than a return to a two-year contract. If you leave the service early, you have to pay off the rest of your "free" iPhone.

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You can get your iPhone for free! Kind of.

James Martin/CNET

Free always comes with its fair share of strings.

That's the case with the multitude of "free iPhone" offers that the carriers have been touting since Apple unveiled the iPhone 7 on Wednesday. One after another, T-Mobile, Sprint and Verizon offered to give you a free iPhone 7 in exchange for an older model. AT&T initially offered the deal to just its DirecTV customers before opening it up to everyone.

Take a look at the fine print and how the deal is structured (each carrier has their own minute differences), and you see why the carriers are so generous. You still have to pay a monthly device fee, but you get a $650 credit split between 24 months to cover the payment. By the way, you also have to pay taxes on the full value of that free iPhone too.

If you leave early, the credit goes away, and you're left paying the balance of that phone. Leave your carrier after a year, you're on the hook for $325.

Welcome back, two-year contract.

Over the last few years, carriers have talked loudly about getting rid of contracts that lock customers up. But the new free iPhone offer is essentially another form of the contract, one wrapped up in a more attractive package.

In the era of contracts, carriers like Verizon would subsidize your phone, so you would end up paying $200 for a $650 iPhone. The modern equivalent of that $200 is you turning in your old iPhone, which you likely bought for $650 (or more).

This isn't by any means a terrible deal, but it's important to understand why the carriers are offering these deals. The catch is you have to stick around for at least two years. For many customers loyal to their carrier, that isn't a big deal -- you were going to stay with them anyway.

As long as you don't mind that obligation, the $650 credit is better than you'd get from phone trade-in sites. A 128 gigabyte iPhone 6S for AT&T is worth $255, according to Gazelle.

With most of today's wireless bills split between the device and service fee, losing the device fee is a nice plus.

The carriers are only offering a $650 credit, so it doesn't matter which iPhone model (going back to the iPhone 6) you turn in. Likewise, if you want to buy the iPhone 7 Plus or one with more storage, you'll need to pay the difference after the credit.

Each carrier offers slightly different promotions, so be sure to read all the fine print.

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