The Pros and Cons of Buying an iPhone Directly From Apple

Is it time for consumers to start buying their iPhones directly from Apple instead of their cell-phone carrier?

With the release Friday of a special edition of the iPhone 7—and expectations for the iPhone 8 this fall—now is a good time to consider whether such a move makes sense.

Most consumers still buy their iPhones through their cell-phone carrier. But carriers no longer subsidize the price of the phone, eliminating a major incentive for buying through them. So with the price of a new iPhone basically the same no matter where you buy it, consumers need to weigh other factors in deciding where to buy their phone.

With that in mind, here are some of pros and cons of buying directly from Apple.

The Pros

Upgrades. If you want the latest iPhone model as soon as it’s launched, you should look at Apple’s iPhone Upgrade Program. Apple will allow you to trade in your phone as soon as 6 months after signing up, as long as you’re willing to make 12 months' worth of payments to cover the cost of the phone in that time frame.

You can switch carriers. If you buy an unlocked phone through Apple, you can switch cell-phone providers at will even if you haven’t yet paid off your phone in full. If you buy your phone through a carrier, though, you’ll have to pay off your entire remaining balance for the phone before canceling your service to change to a new carrier.

Tech support. Baked in to the iPhone Upgrade Program is AppleCare, which is one of the few extended-warranty programs recommended by Consumer Reports for certain consumers. That means if your phone gets damaged, you can take it straight to Apple to have it fixed rather than having to go through your carrier for any repairs.

Cost of insurance. Although you have the option to purchase cell-phone insurance through your service provider, those plans usually have a higher price than AppleCare and offer fewer benefits, says Marsha Barnes, a financial coach. The cost of AppleCare for an iPhone 7 is $129 for two years, or about $5 per month. The cost of cell-phone insurance from Verizon or AT&T is about $9 per month. (AT&T is $7.99 now but will go up to $8.99 effective April 21.)

Interest-free loan. The iPhone Upgrade Program lets you pay for your iPhone by making interest-free monthly payments for up to 24 months. Only consumers with good credit will qualify, however. If your score is low, it’s a good idea to improve it before you’re due for a new phone.

The Cons

If your iPhone is lost or stolen. AppleCare doesn’t cover a lost or stolen phone, like your carrier insurance will. But if you have homeowners or renters insurance, your iPhone should be included as personal property, and you can be covered that way. Your credit card issuer may also provide protection against theft.

Make sure to include your iPhone in your inventory for your insurance provider, and update the list whenever you get a new phone. Your reimbursement amount will depend on the type of coverage you have as well as your deductible, but at least you have some recourse if your phone is stolen.

You could miss special discounts. Certain carrier-sponsored discounts are available only when you purchase your iPhone through a carrier directly. Buying your next iPhone at the Apple store could mean you miss out on opportunities to save on your monthly service. So check with the carrier you're interested in using.