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What you need to know about U.S. carrier plans and subsidies

I forgot what it's like to actually buy a smartphone. I've been living in a bubble because of my privileged position as a former smartphone reviewer and I missed out on the fact that carrier subsidies aren't really a thing anymore.

Back in the day—that is to say, a mere two years ago—you could purchase the latest smartphone at a significant discount after signing on for another two years of service. But in the last year, U.S. carriers have effectively changed their policies so that their customers have to either finance or lease their smartphones, or just buy them outright.

Are there any major carriers still offering subsidies? The answer is, not really. But that doesn't mean that purchasing your next smartphone has to be a daunting experience. Here's what the four major U.S. carriers are offering in terms of upgrades.

Tip: Most of the major carriers have special offers throughout the year that could save you some cash on your next device. For instance, Verizon offers up to $300 trade-in value for your old smartphone when you upgrade or add a line on select devices. These deals change from time to time, but like buying a car, if you can wait to upgrade until the next promotion, it could afford you some major savings.

Verizon Wireless

At present, Verizon only offers two smartphone buying options: Financing the phone with monthly payments, or buying the phone outright. By default, Big Red will allow you to pay for your phone over the course of 24 months, or two years from your purchase date. For instance, if you wanted to buy the 32GB Samsung Galaxy S7, you'd be paying $28 a month until you reach the $672 retail price. Alternatively, you could also put some money down, like $200, and only pay $19.67 per month for 24 months. Unfortunately, you can't pay extra towards the balance of the phone each month after the fact, though you can choose to pay it off entirely at any time if you have the funds.

Big Red will allow you to pay for your phone over the course of 24 months.

Long time customers have a little more luck. Verizon stopped offering subsidies to new customers late last summer, but if you were on contract at that time and you're only now considering an upgrade, you can still buy your next smartphone at a discount until Verizon decides otherwise.

AT&T

Like Verizon, AT&T allows you to pay for your smartphone over time or in one lump sum. There are is an option if you're aching to upgrade early on, however, and depending on your credit, you might even have the luxury of paying off your phone slowly, up to 30 months after initial purchase.

AT&T Next is a bit more flexible than Verizon's offering.

AT&T's financing plan is called AT&T Next, and it's a bit more flexible than Verizon's offerings. For example, if you're looking to upgrade to the 32GB Galaxy S7 edge and you have a good credit score, you can choose to put nothing down and pay $36.50 a month for 30 months. You could also lower your monthly rate by adding on an optional down payment and then choose to pay off your device over 24, 18, or 12 months if you qualify.

AT&T also offers a Next Every Year program, which makes you eligible for a discount on a new phone with a trade-in, but only after your current device is halfway paid off (this takes roughly one year). And if you cancel your service in the middle of paying off the device, you'll have to pay it in full before you can leave.

Sprint

If you're a Sprint subscriber, you can choose to lease your phone, buy it outright, or pay for it in monthly installments.

Sprint's leasing program works similarly to leasing a car. You choose almost any phone you want and then pay for it over the period of 24 months. At the end of the lease, you can choose to pay off the remaining balance on the device, trade it in for a new model, or continue paying month-to-month until you figure out what you want. There's also a $5 monthly Early Upgrade option, though you'll have to have paid toward your device for 12 consecutive months before you can upgrade to a new phone. And if you're crazy for every new Samsung device, you can sign up for the Galaxy Forever leasing program.

Sprint's leasing program is a bit problematic. You don't actually own the device unless you choose the purchase option and should something major happen to the device in your care before it's paid off, you'll be liable for the Damaged Device Fee unless you're enrolled in the Total Equipment Protection plan, which also costs a monthly fee.

Sprint's leasing program is problematic in that you don't actually own the device.

At the end of it all, Sprint's leasing program doesn't sound like the best deal. You'll have to pile on program fees just to ensure you're not paying up the wazoo at the end of the lease, and if you decide to keep the phone, you'll actually be paying more than the current value of the device at the end of the leasing terms. The full terms of Sprint's leasing program are here{.nofollow}.

It's also unclear if Sprint has done away with subsidies. On its cell phone upgrades page, Sprint says, "If you have completed a 2-year commitment, you can upgrade to another discounted device if you enter into a new 2-year Service Agreement." This applies only to those customers that are paying at least $40 a month for their bill.

T-Mobile

T-Mobile's Jump program costs $10 a month and includes device insurance. Once you're signed up, you'll pay for the device in monthly installments, and after it's halfway paid off, you can trade it in for a new one.

T-Mobile will let you pay for your phone outright or in 24 month installments.

Like Verizon, T-Mobile will also let you pay for your phone outright, or in installments over 24 months, though you may have to fork over a down payment depending on your credit score. At the very least, that down payment goes towards the full price of the phone. You can also choose to pay extra each month so that your phone is paid off sooner, though you'll have to file that separately from your monthly bill so that it's registered in the system as a device payment.

Lastly, T-Mobile offers a leasing program called Jump! On Demand, which is great for smartphone enthusiasts who are keen on having the latest and greatest but don't necessarily want to commit to shelling out all the cash at once. You'll essentially be making monthly payments to use the phone, though you'll never actually own it. The upside you can walk into any T-Mobile store and trade your months-old phone in for a new one, up to three times in a year. But it also means that you can't get too attached to your daily driver.

Florence Ion is an editor and columnist at Android Central. She writes about Android-powered devices of all types and explores their usefulness in her everyday life. You can follow her on Twitter or watch her Tuesday nights on All About Android.

59 Comments
  • OK.
  • Sprint ended the Galaxy Forever program in July and has ended the leasing option for virtually all Android phones. The Galaxy Note 5 is the only Android phone listed with a lease option on Sprint's site. Other than that, leasing is only available for iPhones now.
  • I'm going to double check with PR on this and update if needed. Thanks!
  • Nice summary. I would add to the Jump On Demand program, though, that it is an 18 month lease and if you keep the phone for the full 18 months you are required to jump to a new phone or pay off the rest and own it; they don't have an option to continue paying for it until you decide what to do.
  • And the monthly cost for Jump! varies by device. Tier 1-3 devices cost $9/month. Tier 4-5 is $12/month. I don't recall specifically which devices fall into which tiers but you can bet the flagships are Tier 4-5.
  • Yea...the store didn't explain Jump on Demand well when I moved over to it from the original Jump plan. I was thinking of moving to Project Fi and had a rude awakening when told the costs to end my phone lease (which I didn't know was a lease). I was a little pissed to say the least. One more thing to remember is that, after the 18 month lease is up, you then are given the option to buy the phone that you've been paying for all this time. I don't think it's a very good plan in that respect.
  • Also, T-Mobile doesn't seem to have a good way at keeping track of jumps for Jump On Demand customers. And every time I ask if the 3 jumps per year are per calendar year or within a 12 month period, I always get different answers depending on who I talk to. Honestly I think you could probably game the system and keep jumping to new phones as long as you're not obvious about it.
  • As a JOD customer myself, I was always told that I can change phones 3 times within a 12 month period.
  • I had the same issue. When I was asking around with T-Mobile reps. The first guy I talked to said 12 months, I explained I had Jump on demand since the beginning in June, he said that I would be eligible for another three devices the next June. I asked him how it is then that I got a fourth device in February before June, he said it was financed and I switched off of the JOD plan. I called again to talk to someone different, she stated I clearly was not on a finance plan and my JOD eligibility restarted in January since it goes off Calendar year. To date, I still do no know the answer but it seems as if the calendar year is the more correct answer based on my upgrade experiences.
  • As a T-Mobile rep as far as I know it's every calendar year.
  • Welcome aboard Flo!! Now, please get on the podcast this way I can have 2 Flocasts per week!!
  • Yeah, just saw that. Welcome Flo!
  • waves
  • I purchased my Note 7 on Sprint through the subsidize plan. I paid $350.00 plus tax and got my Note 7. they still exist on Sprint maybe just not for everyone. I've bee with them for around 13 years so maybe it is a loyalty program.
  • I'm on the everything data and got the note 7 for 15 bucks a month . I like how they still give legacy plan people good deals
  • I am on the same plan. Do you get charged a straight $15 a month? Or do they add taxes on it too?
  • The taxes for a phone on installment billing are charged at time of purchase.
  • Yeah. I still get a subsidy at Verizon because I've been a super long time customer (I inherited my dad's number, which he activated in 1996). Which is why I was super confused about whether subsidies were still a thing!
  • Florence,
    Very good read today! Do you like "Flo" or "Florence"?
  • whichever.
  • Great write up, thank you. This sort of thing interests me for some odd reason..
  • After purchasing a lemon LGG5 from T Mobile, I purchased an international G5 from B&H in NYC ( incredible people to do business with). I still have T Mobile as my provider, but have insurance through B&H at an awesome price (so was the bundle price ... forgot to mention that I purchased a bundle from B&H) So I have a phone at a throw away price (or keep as a back up) that I can use in both North & South America plus some Asian & European countries. Can't beat that. Posted via the Android Central App
  • Best deal would be to buy the device up front. Or buy it using any EMI options like Apple does with Barclays. It's cheaper in the long run plus no carrier approval delays for software approvals.
  • And Flo, this is a well written article. Looking forward to reading the next report on your research. Posted via the Android Central App
  • You're not leaving AAA are you? The chemistry you have with Ron is epic!
  • That's one way to put it. She's annoying as hell on AAA
  • Ron's her other dad.
  • I've always had issues with the word "subsidised" in regard to carrier contracts. It's not really the right word and gives a false idea of what the deal is. It's what leads people to believe you could buy a flagship phone for $200, which is obviously not true and never has been. It's hire purchase. It's debt. The only times I can think of a phone possibly being subsidised is when Google was believed to be selling the Nexus 4&5 at cost. Which turned out not to even be true anyway. But for some reason the word subsidised refuses to die.
  • Absolutely correct.So called subsidized is nothing more than the cost built in to your monthly payments for the next 2 years with punitive action if you leave prior to the end of the 2 year contractual obligation.Monthly payments are zero % interest,if you want to leave,pay it off and leave.Not really a great deal of difference in cost.
  • Not true. My monthly bill does not change where if I rented or leased the phone my bill would go up $35.00 a month. I pay the same rate every month for my service regardless if I get a new phone or keep the same phone for longer than the 2 year terms.
  • Ok,good for you.I think most people can understand what is being said here and do the math.You do you,and enjoy it any way that makes you feel better. We weren't discussing renting or leasing.we were discussing monthly payments towards ownership or the same cost being built into a contractual obligation with something like a $200.00 up front payment and the rest of the cost being built in to your contractually obligated monthly payments for the next 2 years,also resulting in ownership. Enjoy.
  • This 100%. You were paying for the phone as part of your monthly bill, it simply wasn't itemized that way, That's why your sales tax (for those states that have it) was always on the full price of the phone. The carriers weren't fooling the government, they were just fooling the consumer.
  • But if that is correct then why when I go to lease/rent a phone today am I expected to pay $25.00 to $35.00 more monthly? Also, here in Texas I only pay tax on the amount I'm paying on the phone and not the full retail amount of the device like they do in California? So if the cost of the phone is already in my monthly bill I'm better off paying $350.00 up front for the phone and not $35.00 a month more in addition to what I was already being charged. Just trying to make sure I understand this correctly. If I'm wrong please explain how this works.
  • Yeah, none of the carriers knocked that $35 off the monthly service cost, so really ending contracts was just a way to charge people more money.
  • Exactly my point. Thanks
  • T-mobile did at first, and made it obvious. But now all of their plans have changed and focus on having multiple people on your account with different data allotments, so I don't know how their prices now compare to before. I remember that Verizon and AT&T were similar when they changed their pricing as well.
  • What carrier are you with mrfrett79? Maybe you posted it elsewhere, just have not seen it.
  • Sprint
  • I can't speak for all carriers, but on Sprint when a customer gets a "discounted" phone on contract, California is the ONLY state that taxes the full retail price. All other states tax the discounted price.
  • I can't fathom buying $700-$1000 phones on monthly installments for the next 2 years of my life (or upfront for that matter). There are way too many great unlocked phones in the $200-$500 range. Buy one of these and enjoy the savings over the next 2+ years. I love being unlocked and contract-less and saving lots of money. :-)
  • But but but, you do not have the latest and greatest.
  • Only until it's due for a recall :D
  • I wouldn't say great.
  • Monthly cost stated for att us for the 12/24 plan not the 24/30 just so you know Dogg.
  • ..oh that flo...
  • Those free iPhone 7 offers that came out recently are essentially two-year contracts, right?
  • Yes,because the carrier pays for it in monthly increments that take 2 years to equal full value. To keep you with them and on the hook.
  • Verizon it appears that if you are already under contract they will also let you add a line under contract as well. Went to Best Buy with my wife and was going to get a phone added to her line and they told me she could and still have both under 24 month contract.
  • Right now if you are on Verizon if your contract is up for renewal you can get a Samsung S6edge for a buck..
  • The problem is, if you are on the Verizon Plan and are under contract, you pay an extra $20/mo. So you might as well just get on the payment plan.
  • There are some people that you can't explain that to,no matter what,so, to hell with it.
  • All of you are suckers
  • Here's some advice for buying a phone from your carrier: DON'T. Get an unlocked phone instead.
  • ^ This, all day long.
  • What's the worthwhile advantage? If you get a Nexus device it is stripped bare. Sure you get updates a little sooner but so what? My Note 5 has the September security update. Carriers let you purchase over time and for free. I can use my money elsewhere in the mean time or pay it off whenever I want if I choose to move carriers.
  • I have 3 phones on Verizon. When I log into my account and check the upgrade status of each line, I have the option to make additional payments on the device other than a complete pay off.
  • Sprint is still offering subsidized devices on their small business plans. As least for existing customers.
  • I have a real problem with carriers selling phones. I don't think I'll ever do that again. Even though I'm on Verizon, I'd rather buy a slightly used or refurbished unit. There just isn't any real price competition and that's where the government might do well to step in and require devices to support all bands. Dunno...
  • I think Verizon is switching over to gsm in the next 2-3 years. That would force Sprint as well. Do however think that the major phone mfg's should stand up to the big 4 carriers. Offer unlocked devices & ditch bloat. Put the carrier bloat directly on the carriers site available for download for the few that may use it.