Apple’s iPhone upgrade program: How does it work?

Julian Chokkattu/Digital Trends

For iPhone aficionados, it’s always Christmas in September because that’s when you can turn in your current iPhone for a brand-spanking new one. And as Tim Cook perpetually promises, it’s the best iPhone Apple has ever made and he’s super excited about it. One way to trade up is through Apple’s iPhone Upgrade Program, which lets you get the newest iPhone model every year. Here’s the lowdown on how it works.

What is Apple’s iPhone Upgrade Program?

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The iPhone Upgrade Program is specifically designed to let you trade in your current iPhone for one of the newly released models every year. Launched in 2015 with the debut of the iPhone 6S, the program lets you pay off a new iPhone in 12 monthly installments. It starts at $35.33 per month for the 64GB iPhone 11. The iPhone 11 Pro starts at $49.91 per month, while the Pro Max version starts at $54.08 per month. The methodology will feel familiar to most iPhone customers as it’s similar to the carrier deals of old that offered discounts in exchange for a two-year contract and a subsidized monthly fee, or purchasing your phone outright for a monthly fee.

The iPhone Upgrade Program lets you buy a new iPhone with 24 payments, but the cool part is that after you complete only 12 payments, you can automatically upgrade to the newest iPhone. The program applies only to the newest, latest models. If you have your eye on an older phone, you’ll have to go through Apple’s trade-in program.

What’s so great about it?

There are plenty of advantages to signing on to the upgrade program, and here are some major ones.

You can get a new iPhone every year without being tethered to a single carrier. With every purchase, you get to choose your carrier, and it can be a different one than on your previous phone. So if you’re unhappy with the service, you only have to suffer for one year before you can switch out.
The upgrade program includes the AppleCare+ warranty, which provides up to two years of hardware repair coverage, software support, and up to two incidents of accidental damage, though that last one carries a service fee of $29 for screen damage, and $99 for other damage, plus tax. Most people are loathe to shell out an extra $199 for a two-year extended warranty after they’ve spent up to $1,000 on the device (and are often sorry they didn’t when something bad happens to their phone), but the upgrade program builds it into the overall price painlessly. You can even upgrade the AppleCare+ coverage to include theft or loss for an extra $4.17 per month.
If you own an Apple Card credit card, you can use it for your monthly payment and get 3% daily cashback with each payment. Sweet!

How do I get started?

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The iPhone Upgrade Program is available at Apple Retail stores in the U.S. and online via the Apple.com website. It’s also available in the U.K. and China. When you set out to buy a new iPhone, a choice called iPhone Upgrade Program will appear after you select your chosen model, color, capacity, and carrier.

You need a valid credit card, a not-too-terrible credit score, and to be over 18 years old. Apple’s retail stores run the upgrade program in conjunction with Citizens One, which will run a credit check to approve you for a 24-month interest-free loan. If you are under 18, you’ll have to con your parents or some other adult to front the credit card for you. There’s also a pre-approval feature available for returning upgraders and new enrollees. But Apple allows loan pre-approvals for preorders only via the Apple Store app on your iPhone.

Pre-approvals are not equal to reserving a phone; you still have to get in line. But the process lets you select the model you want for faster checkout. You can buy your iPhone online, use the Apple Store app (required for pre-orders), or buy your iPhone in person at an Apple Store.

After you have paid 12 monthly installments, you are eligible to trade in your old iPhone for the new version. Your old phone must be in decent working condition with the ability to power on and hold a charge, with an intact and functioning display without breaks or cracks. If you upgrade online, you will have to sign a new 24-month contract and trade in your old iPhone at an Apple Store or have a trade-in kit mailed to you.

Order right from your phone

You can use your phone to order a new iPhone whether you are already enrolled in the upgrade program or not. Here are the basic steps for non-enrollees ordering a phone that is already on sale. The process is similar for phones in pre-order.

  • Launch the Apple Store app on your iPhone.
  • Select the iPhone model you want to buy.
  • Select No on whether you have an iPhone to trade-in.
  • Choose Finish, Capacity, and Carrier. You must use one of the Big Four carriers, as listed.
  • Choose Apple iPhone Upgrade Program when asked how you will pay.
  • Select I’d like to enroll if you are new to the program or I’m already part of the program if you are currently enrolled.

Then follow the prompts and answer all other questions in sequence to complete your order.

What are the downsides?

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If you love iPhones, the downsides are few. Apple’s program only lets you upgrade to the latest iPhones, as opposed to some carrier plans that allow you to hop over to the Android side of the fence. If you are inherently platform agnostic or super adventurous, then maybe the iPhone Upgrade Program is not the right thing for you.

If you’re squirrely about your credit, be aware that Apple states the following: “Citizens One reserves the right to perform a credit inquiry as needed to determine loan eligibility. Depending on your account performance and transactional history in the iPhone Upgrade Program, Citizens One may approve your new loan application without your credit being impacted.”

Apple works with AT&T, Sprint, T-Mobile, and Verizon, so you can’t purchase a SIM-free iPhone through the program. But after 12 months, you can switch to a different carrier among those same four choices.

What if I change my mind and want out?

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Not so fast. The iPhone upgrade program is a legal contract with Apple and Citizens Bank for a 24-month term. You can upgrade to a new iPhone after 12 payments, which means you are renewing your 24-month hardware contract with both parties. If you want out before that term is up, you will have to fork over the remainder of the cost of the iPhone and AppleCare+ plan. You then keep the phone to dispose of as you wish. AppleCare+ coverage runs for two years from the date you signed the contract, regardless.

What if you lose the phone or it gets snatched out of your hands while you’re riding the train? That’s where the extra AppleCare+ with Theft and Loss policy can save your butt. With that extra protection, you just fill out a claim form at Apple’s claims site. Customers with only the standard AppleCare+ policy will not be eligible for the upgrade option and Apple advises you to call AppleCare at (800) 275-2273 to cancel your current plan.

Good to know

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Even though you signed up for the iPhone Upgrade Program, that does not compel you to update your phone every 12 months, even though you can. Repeat: You do not have to upgrade if you don’t want to. After 24 months, you’re paid up for both the device and AppleCare+, and the phone is now yours to keep using forever, sell, give away, or have as a spare. If you upgrade after 12 payments, you just sign a new 24-month contract.

If you re-enroll in the program, the cycle starts on the order date, not the arrival date of your phone, so your upgrade cycle doesn’t get pushed out of whack in case of delayed shipping.

Apple is not the only one with an upgrade plan: All major carriers have some kind of upgrade offer. For example, Sprint lets subscribers upgrade to a new iPhone every year through its iPhone Forever leasing program. You can upgrade to a new iPhone every 12 months but without any warranty and device protection coverage. T-Mobile has the Jump program that also lets you upgrade to a new phone after 12 months of payments, and it folds damage coverage into the monthly fee. With AT&T’s Next Up plan, you can trade in your phone after paying off 50% of the retail price — after about 12 months. Verizon’s annual iPhone upgrade plan also lets you trade in your phone after you’ve paid off 50% of the cost of your current one.

Bottom line

If you’re in the market for a brand new iPhone, you can use the Apple Upgrade Program to start paying it off in installments via a no-interest loan, if you are eligible. This gives you the freedom to upgrade after 12 payments whenever a new iPhone comes out — or hang on to the one you have — as well as the ability to change carriers and purchase a protection plan as part of the bargain. If you are a dedicated iPhone customer with no desire to switch to Android, the upgrade program is worth checking out.