A carrier’s free phone is 36 monthly bill credits that stop if you cancel, pay the phone off early, or drop to a plan the deal doesn’t cover. Multiply the monthly gap between the plan the deal requires and the cheapest plan you’d otherwise carry by 36. If that beats the phone’s unlocked price, the deal costs you money.
The fine print under every launch offer says the same thing. The credits arrive across 36 monthly bills, they require a specific plan, and they end if you cancel the line or step down to a plan that does not qualify. Paying the phone off early ends them too at Verizon and T-Mobile, and AT&T says it may.
Cancel the line and the whole unpaid balance on the phone comes due.
Read that as a price tag. The carrier is not discounting a phone. It is selling three years on its priciest tier and handing part of the premium back each month. It reserves the full credit for the top plan, and the credit shrinks on every tier below. The phone you trade in is the same phone on every tier. What changes is how much plan you agreed to buy.
The trade-in works the same way. Its value arrives as monthly credits over the same term, so leaving early forfeits the unpaid remainder of a phone you already handed over.
So price the plan first. Find the cheapest plan you would carry if no phone were on offer. Find the tier the credit requires. Multiply the monthly gap between them by 36. Say the phone lists at $1,000 unlocked and the qualifying tier costs $30 a month more than the plan you’d otherwise pick. Thirty-six months of that gap is $1,080. The free phone cost more than the phone, and it locked you in for three years.
Run the same check on the trade-in. If the phone you’re handing over is in good shape, price it on a resale marketplace, because a private sale pays its real value in one lump sum, with no plan attached. A cracked one is worth more in a carrier’s any-condition trade-in than to any private buyer, provided the plan math already works.
If you were going to sit on the top tier anyway, the credits are real money. Take them. Otherwise, treat the qualifying plan as the phone’s price, and buy only if you’d pay that price in cash.
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