The Hidden Cost of Free Phones: Understanding Upgrade Programs
Free iPhones for you and your whole family! If you sign a contract now, we’ll even throw in data roaming!
If a cell phone plan sounds too good to be true, it probably is.
While “free phones” may seemingly save you money, most plans include hidden charges, longer contracts, and other variables that cost you more long-term. Not to mention the scam artists offering free cell phone service in exchange for your payment information and other personal details.
Goji Mobile can help you find the best wireless phone plan for your needs and data preferences, whether you’d like a certain iPhone model or unlimited talk. This way, you can avoid the hassle of switching services or locking yourself into non-transferable contracts.
In this guide, we’ve broken down all the hidden costs of “free” phones and the most common wireless programs you can seek out to find your best upgrade.
The Hidden Cost of Free Phones
There’s no such thing as a free lunch, let alone a multi-hundred dollar phone. Most free cell phones have some sort of catch, such as higher monthly fees, long-term contracts, and hidden charges. The “free” price tag is merely a marketing strategy to lure you in.
In many cases, you’ll end up spending more on a free cell phone service than on the other available options — even if you save a couple of dollars upfront. Service providers often increase and add other charges that last your entire contract period. These charges include:
- More expensive service and data plans
- Early termination fees
- Activation fees
- Access fees
- Universal Service Fund charges
- Gross receipt surcharges
- Regulatory charges
- Insurance
- Taxes
Many of these charges, such as state taxes and Universal Service Fund fees, are necessary for the service provider’s operations and program participation. However, that doesn’t mean customers should pay for them directly.
Many wireless providers already include these fees in their standard service plans and business models. Unfortunately, other providers may separate these charges to advertise seemingly cheaper plans — only revealing the hidden fees later. For example, a provider may drop their advertised plan costs by $10 but add $15 in surcharges. The price tag seems smaller, but you’ll end up paying $60 more each year.
The Different Types of Upgrade Programs
Not every free smartphone is a scam — many services genuinely do lower your phone bill without any hidden surprises. However, eligibility and criteria often vary by program, and the best government (and private!) programs change often. So, you should take some time to determine your best free cell phone options.
Consider the following wireless phone programs.
Trade-In Programs
Is your current phone in good condition? Trade it in. Trade-in programs let you exchange your previous phone for a discount on your new one. In some cases, trade-in programs can even eliminate your phone’s financing altogether, though these are usually limited-time promotions.
How much you can actually take off your new bill depends on your phone’s quality and the trade-in program you choose. You typically won’t be able to exchange your previous model for the price you originally paid, especially if it’s more than a couple of years old. Additionally, some providers only accept trade-ins from qualifying customers, such as those who’ve already completed long-term contracts.
The following factors can impact how much you can save by trading in your old phone:
- Phone model
- Functionality
- Screen and liquid-crystal display (LCD) condition
- Battery condition
- Scuffs and marks
- Liquid damage
- Device protection plans and warranties
Installment Programs
Instead of paying for a new phone upfront, you can opt into a long-term installment plan. While you certainly won’t get a free phone this way, these plans significantly diminish your payments by stretching them out. You can then add each payment to your regular monthly bill.
Most installment programs last anywhere from six to 24 months. This long-term commitment may even save you money on the rest of your phone bill, depending on what the provider offers. For example, most phone providers offer smaller fees if you sign longer data contracts. Since you’re already agreeing to a long-term installment program, you can set all of your other bills to this same schedule and potentially save more over time. Of course, you should always check for hidden fees and surprise charges before signing.
Leasing Programs
Another way to get your hands on a relatively “free” phone is to lease it. Standard leasing programs charge a one-time fee upfront, followed by smaller, regular payments. However, unlike most payment installment plans, you don’t get to keep your wireless phone at the end of the lease. Instead, you’re only paying to lease or borrow the phone for the short contract period. After the lease, you can then buy the phone outright or exchange it for a newer model and a new lease.
Some people prefer leasing programs because they can upgrade their phone models more frequently. Beyond that, leasing is usually cheaper than purchasing your phone altogether, and your credit score shouldn’t be an obstacle.
Unfortunately, some leasing programs include extra fees and charges that can drive up your monthly costs. Additionally, depending on the contract, you may be responsible for any physical damage to the phone. So, you should thoroughly review your phone’s lease before signing to understand your responsibilities and risks.
Annual Upgrade Plans
While it’s still not quite a free cell phone service, an annual upgrade plan can significantly slash the costs associated with buying a new phone. These programs vary by provider, but most let you upgrade your phone to a new model every year. The provider will then cover a significant portion of your new phone. From here, you can pay the rest upfront or simply add the installment plan to your monthly bill.
Many people prefer annual upgrade plans because they can regularly upgrade their phones without worrying about leases or high price points. Plus, you don’t even need to upgrade to a new phone every year. This way, if you like your current model, you’re waiting for that new iPhone, or you can’t afford it right now, you can simply save your upgrade until you’re ready.
Free Phone Sign-Up Plans
Many wireless providers advertise that you will get a “free phone” if you sign up as a new customer. While these promos may seem tempting, most include hidden fees and higher bills than what other providers offer. You may find a few legitimate free phone plans — such as around Black Friday — but most phones aren’t actually “free” once you’ve added up all the charges.
Lifeline Assistance Program
The Lifeline Assistance Program is a federal benefit program that offers cell phone discounts to low-income consumers. The goal is to equip everyone with equal opportunities and security, especially as more workforces depend on cellular technology. This way, professionals won’t be disqualified from job positions for not having cell phones or other contact methods. It’s also a safety issue – people living alone can quickly contact emergency services if they have a cell phone.
Standard eligibility for the Lifeline Program is based on your income and number of household members. For example, a household with one person must make under $20,331 annually to be eligible in 2024. Meanwhile, a household with two members must make under $27,594 to be considered low-income.
You may also be eligible for the lifeline discount if you’re enrolled in any of the following programs:
- Supplemental Nutrition Assistance Program (SNAP) or food stamps
- Supplemental Security Income (SNI)
- Medicaid
- Federal Public Housing Assistance
- Veterans Pension Program
- Survivors Pension Program
- Tribal Eligibility Programs if you live on qualifying tribal lands or American Indian reservations
Even if you’re part of these programs and acquainted with the national verifier, enrollment in the lifeline program can still take time. Prepare your social security benefits statement and other proof of eligibility in advance to guarantee you have everything you need for at least one monthly service discount.
Affordable Connectivity Program (ACP)
When it was active, this federal benefit program helped low-income households afford wireless phones, often for work, school, and other essential services. It contributed significant discounts on cell phones and other devices, making service plans more accessible. Plus, the Affordable Connectivity Program let customers choose their own phone services. This way, families could select plans that met their specific needs, such as an extra phone line or unlimited data, without being restricted.
Unfortunately, the Affordable Connectivity Program is officially winding down. Individuals have not been able to apply or enroll for the ACP since February 2024, and full funding ended in April 2024. So, unless you’re already enrolled, the Affordable Connectivity Program won’t help you lower your phone bill at this time. That said, if funding isn’t eventually renewed for the ACP, other government benefit programs may be introduced later to take the ACP’s place.
The Best Way to Upgrade Your Phone With Goji Mobile
With so many programs and charges to track, it can be tough to compare all the different plans and find one that works for you and your household. Goji Mobile helps users access the best phone plans for their needs and preferences, whether they’re interested in unlimited talk, unlimited data, or a particular model. Most importantly, Goji Mobile can help you achieve this without the hassle of switching or getting locked into expensive contracts.
To start, download the Goji app and add information about your current phone plan, including your monthly payments, number of lines, and contract duration. Goji will then use this information to determine the best plans that meet your needs. It automatically compares prices, data, minutes, devices, availability, and phone service quality in your area.
Goji also offers a comprehensive coverage guide, personalized recommendations, and other tools to help you review your options. For example, if you frequently travel, you can use the interactive coverage map to gauge your phone service quality in different regions. You can also use Goji’s transparent pricing and flexible payment options to fine-tune your bill to your budget.
Upgrade Your Phone Without Hidden Costs
You don’t want to end up paying more just by looking for a deal. Paying attention to your free phone service options can help you avoid unnecessary charges throughout your contract. However, it’s important to learn about these options before signing up for your next plan — otherwise, you could lock yourself into a year or more of hidden costs.
Goji can help you find the best options for your budget and phone preferences. Try Goji Mobile today to simplify your phone upgrade and see how much you can save.