Trim your wireless bill -- skip that phone upgrade

It's hard to teach an old dog new tricks.

Wireless subscribers have been conditioned to get a new phone every two years. That made sense back in the day, when wireless subsidies from mobile operators let you upgrade to the latest iPhone or Samsung Galaxy for only $200.

Those days are over. Today consumers are expected to pay full price for their devices. The carriers have tried to make the hefty $650 price tag of high-end devices more palatable by offering payment plans. But wireless subscribers shouldn't confuse these plans with the old device subsidies.

In this edition of Ask Maggie, I explain why, in this new era of wireless, you'll spend considerably more if you continue your device-upgrade-every-two-years habit.

Dear Maggie,

I'm a Verizon customer and I just got a text saying I'm eligible for an "upgrade." I'm on a device-financing plan, so I didn't think I got an upgrade anymore. What are they talking about? Should I take this upgrade?

Thanks,
Bring on the free upgrade

Dear Bring,

If you're on Verizon's Edge payment program, there's no such thing as a free upgrade. You've been making monthly payments on your device. Those payments are separate from the service charge you pay Verizon every month for voice, data and text messaging.

What Verizon's message is likely telling you is that you've paid off your old device. If you'd like to get a new device, you can turn in your old one and start making payments on a new one.

If you want a new phone, you have the option of either buying one at full price upfront or paying for it over 24 monthly installments. In either case, you're paying the same amount for your phone.

This new way of paying for a device is different from the device subsidy model of yesteryear. Previously, carriers like Verizon would require you to sign a contract for two years. In exchange, they'd subsidize the cost of the device, so you'd only pay $100 or $200 for a new phone.

Every two years after your contract expired, Verizon would give you an "upgrade" for a new phone. Under this old model, it was a smart idea to get a new phone every two years because the monthly price you paid Verizon didn't change regardless of whether you had "paid off" your device. In other words, you paid the same price whether you were two months into your contract or your contract had expired and Verizon had already recouped the subsidy of the device from you.

But now that subsidies are gone, your monthly bill can actually be reduced by $20 or $30 a month once you've paid off your phone.

One more big difference is that some of these installment plans ask you to trade in your old phone in order to get the best monthly price for your new phone. Another thing to keep in mind is that when you upgrade to a new device, Verizon charges you a $20 upgrade fee. I'm not exactly sure why it needs to charge you a fee to activate a new device on an existing line, but that's the new reality.

What should you do?

It's nice that Verizon is reminding customers when they're close to paying off their old devices. But these messages shouldn't be confused with the old subsidy model under which you were eligible for an upgrade every couple of years. The question you need to ask yourself is whether you want to spend more money each month to get a new phone or would prefer to save that cash by holding onto your old phone.

It's similar to deciding whether to buy a new car. Some people buy a new car every couple of years, and that's fine. But recognize that over time, you'll spend more money than if you'd just kept your old car.

With phones, you still have the option to upgrade to the latest and greatest device, but just remember that you'll be paying the full retail price for it. Keep in mind that the latest Apple iPhone or Samsung Galaxy device will start at around $650.

The bottom line

My advice is that unless your phone is damaged, keep it and use it until it dies. That's the best way to get the most value out of your purchase.

Ask Maggie is an advice column that answers readers' wireless and broadband questions. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.