AT&T Has A New Smartphone Payment Plan That Will Let You Upgrade Once A Year, But Is It A Good Deal?

AT&T chicago flagship store

AT&T announced tonight a new plan that will let customers upgrade to a new smartphone once every year. 

It’s called AT&T Next, and it’s very similar to the “Jump” trade-in program rival carrier T-Mobile announced last week.

Here’s how it works:

New AT&T customers and those eligible for an upgrade can sign up for Next. You get a new smartphone or tablet for $0 down, but you have to agree to pay a monthly fee for the device.

The monthly fee is the unsubsidized price of the phone (the price you pay if you buy the phone without a two-year agreement) divided by 20, so it varies depending on the device you choose. For example, AT&T will charge you $32 per month for Samsung’s Galaxy S4, but prices for other devices will range from $15 to $50 per month.

After you’ve made 12 monthly payments (a year’s worth), you’re eligible for an upgrade and can get a new phone or tablet again for $0 down and a set monthly payment. 

There are, of course, some caveats:

When you’re ready to upgrade after your 12 monthly payments, you have to trade in your current smartphone to AT&T. They’ll refurbish it and sell it to someone else at a discount. (On the other hand, you can pay off the device in full if you want and keep it forever.)

You also have to pass a credit check to be eligible for Next.

Finally, all phones using Next are on a 20-month payment plan, meaning you’ll have the phone fully paid off after 20 months if you don’t upgrade after 12 months.

So, is Next a good deal?

Unfortunately, there’s no simple yes or no to that question. And if you want to upgrade your phone once a year, the answer is still “maybe.”

Let’s use the Galaxy S4 as an example again. AT&T will charge you $32 per month for the Galaxy S4 if you sign up for the Next payment plan. (That’s on top of your normal data/voice/texting plan.)

After 12 payments, you’ll be eligible to upgrade. That means you’ll have to pay $384 before you can trade in your Galaxy S4 for a new phone. But, you can also pay off the phone over 20 months, which will cost you $640.

Normally, a Galaxy S4 costs $200 and you can upgrade after 24 months. So if you plan to keep your phone for 24 months or longer (which many people tend to do), you’re better off getting it at the normal subsidized price and skipping Next.

Bottom line: Think of AT&T’s Next plan more like a rental service. It’s good if you love having the latest and greatest phone every year, but it’s not a good deal for everyone else.