Those promotions that promise a ‘free’ iPhone? It’s not free.

There is no such thing as a free iPhone.

But phone companies would like you to believe otherwise. In recent weeks, AT&T, Verizon and T-Mobile have littered their websites, billboards and stores with ads proclaiming that you can “get the iPhone 15 Pro from us.”

To get this $1,000 iPhone for $0According to the carriers, all you need to do is trade in an older phone and sign up for a wireless plan. In reality, the free phone promotions may push smartphone owners to spend more in the long run by forcing them to subscribe to more exorbitant service plans, bundled with redundant features such as large high-speed data packages and subscriptions to streaming services.

I spent several days plugging numbers into the carriers’ websites and chatting with store reps to get some realistic out-of-home numbers. To test the promotions, I submitted a three-year-old iPhone 12 as a hypothetical trade-in. (On average, people upgrade to a new phone every three years.)

Here were the costs to get the new iPhone 15 Pro through the promotions, excluding taxes:

• Verizon’s free iPhone deal would cost approx $3,240 over the 36 months it took to take advantage of the promotion, about $300 more than buying the new iPhone with a cheaper Verizon plan during the same period.

• AT&T’s deal would cost a customer approx $2,675 for the 36 months it takes to take advantage of the promotion, a little more than trading in for the new phone and choosing a cheaper AT&T plan.

• T-Mobile’s promotion would cost $2,400 more than two years to redeem the phone credit, about $160 more than buying the new iPhone with a cheaper T-Mobile plan.

“People who think they’re getting free phones from the carrier are in for a surprise,” says Toni Toikka, CEO of Alekstra, a consulting firm that helps companies lower their cell phone bills.

Verizon said customers could choose which plan was best for them, and that the promotions were aimed at people looking for the best network experience. T-Mobile said deals weren’t just about free phones and that it aimed to offer the best value with its premium plans that include perks like Netflix streaming and the flexibility to upgrade regularly. AT&T declined to comment.

If you want to save money, it’s always a good idea to trade in your old phone for credit to reduce the cost of a new one. Be wary of any promotion that offers a freebie.

Let’s take a deeper look at the iPhone giveaways advertised by Verizon, AT&T, and T-Mobile. Then I’ll share some better ways to save money on trade-ins.

Verizon

Verizon’s demands to get a free iPhone 15 Pro are the most aggressive. If you trade in an iPhone 12, you can earn $1,000 in bill credits spread over 36 months. To qualify, I had to choose a $90 per month wireless service plan called Unlimited Ultimate. The total cost over the three years would be $3,240.

In contrast, if I were to trade in the iPhone 12 and choose one of Verizon’s cheaper plans, like the $65 per month Unlimited Welcome, a basic mobile plan with unlimited data, Verizon would offer $415 for the three-year-old iPhone. The total cost of buying and using an iPhone 15 Pro on the cheaper plan for three years would be $2,925.

The main benefit of Verizon’s more expensive Unlimited Ultimate plan is that it offers 60 gigabytes of mobile hotspots, which let you share a phone’s mobile data connection with a computer. Some people might want this feature, but most won’t need it: only 4 percent of mobile users consume more than 50 gigabytes of mobile data per monthThis is evident from a report by the technology conglomerate Cisco.

So with Verizon’s free iPhone promotion, you’d spend $315 more over three years for a plan with nice benefits than if you traded in your old phone and picked a cheaper Verizon plan.

AT&T

AT&T is offering up to $1,000 off the iPhone 15 Pro with a qualifying trade-in. Only the most recent and most expensive smartphones, like last year’s iPhone 14 Pro, are eligible for the full $1,000 credit. Older phones get less.

AT&T provided a $700 promotional credit for the three-year-old iPhone 12 in the form of rebates spread over 36 months of bill payments. That brought the cost of the iPhone 15 Pro to $8.30 per month spread over three years.

To qualify for the promotion, I also had to choose one of AT&T’s qualifying data plans, which start at $65 per month. All told, including one-time fees, the cost of buying an iPhone 15 Pro and using it on AT&T’s network with a qualifying three-year plan came to $2,675.

In contrast, if I were to trade in the iPhone 12 and choose one of AT&T’s cheaper plans, like the $50 Value Plus plan, AT&T would offer $200 in credit for the older phone, bringing the price of the iPhone 15 Pro back up to $800. With the cheaper plan, the total over the course of 36 months would be $2,635.

The main difference between the $50 plan and the $65 plan is that the latter offers three gigabytes of mobile hotspotting.

This means that you will not get a free iPhone from AT&T through this promotion. Instead, you’d pay about $40 extra over three years for a plan with a mobile hotspot feature.

T-Mobile

T-Mobile is offering to make the iPhone 15 Pro free once you trade in your older phone and sign up for the Go5G Next plan, for $100 per month. The free iPhone comes in the form of billing credits spread over 24 months. Over two years, you’ll pay about $2,400.

But if you sign up for the cheaper $60 per month Essentials plan, which isn’t part of the promotion, T-Mobile is offering $200 for the iPhone 12. After you buy the iPhone 15 Pro for $800, the total cost over two years would be $2,240.

T-Mobile’s cheaper Essentials plan includes 50 gigabytes of high-speed data, which is more than enough. The Go5G Next plan includes unlimited high-speed data and subscriptions to Netflix and Apple TV+.

Again, you don’t really get a free iPhone, but you’ll pay about $160 more over two years for additional data and streaming services.

“Consumers may find it challenging to determine whether the more expensive plan provides additional value,” Mr. Toikka said.

In short

Promotions are temporary, so once the terms expire, rates for wireless services will likely skyrocket – and you could end up spending more without even realizing it.

But don’t let these promotions discourage you. It’s still a good idea to sell your old phone to save some money on a new one, and there are a plethora of trade-in programs online.

Sites like GazelleBest Buy, Amazon and Exchange offer cash or store credit for your old phone, and their used phone quotes are usually higher than the phone provider’s. To reduce the cost of your phone, look for the best deal and choose a wireless plan that suits your budget and needs.

I recently sold my wife’s iPhone 12 through Gazelle for $312 cash, which she used to purchase an iPhone 15 directly from Apple. That dropped the price of the new phone to about $500, and she stuck with the cheap family plan she had been using with her siblings for years.

That is far from free. But it’s better than wasting extra money on a fancy wireless package that she won’t use.