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Under the industry’s unlocking commitments, a postpaid phone becomes eligible for unlocking only after its device financing plan is paid.
The FTC tells people to back up, remove SIM and memory cards, unlink accounts and restore factory settings before trading in a phone.
The FTC suggests asking whether a maker offers a trade-in or recycling program when software updates for a device end.
Trade-in offers are everywhere when new phones launch, and some look too good to pass up. Some are genuinely good deals. Others pay you in small monthly credits that disappear if you change your plan or leave. The trick is knowing which kind you are looking at.
Two very different kinds of trade-in
| Type | How you get paid | Main catch |
|---|---|---|
| Instant or flat trade-in | A one-time payment, store credit or a lump discount off the new phone | Usually based on condition; may be less than selling privately |
| Promotional bill credits | The trade-in value is split into monthly credits on your bill, often for the life of a financing plan | Credits usually stop if you cancel, switch plans or pay the phone off early |
With bill credits, the headline trade-in value is not money in your pocket on day one. It is a promise of credits over many months, tied to staying with the carrier on qualifying terms. Read the offer’s terms for what ends the credits.
Credits, financing and unlocking are linked
Promotional credits usually run alongside a device financing plan for the new phone. Under the wireless industry’s unlocking commitments, a postpaid phone becomes eligible for unlocking only after the applicable device financing plan is paid, the service contract is fulfilled or an early termination fee is paid. So a phone you are paying off in monthly installments, with the payment offset by credits, typically stays locked to that carrier until the financing ends or you pay the balance; see How Phone Unlocking Works: Postpaid, Prepaid and the Waiting Period. If you leave early, you may owe the remaining balance and lose the remaining credits.
Tip: Before accepting a bill-credit deal, write down three numbers: the full price of the new phone, the total of all promised credits and the number of months they last. Then ask yourself whether you are likely to keep that carrier and plan for that long.
Get the terms in writing
The FTC’s general advice applies: if a salesperson makes a spoken promise, get it in writing, because a business might later refuse to honor a promise that is not. For a trade-in, that means the value, the condition grades and what happens if the phone is graded lower than you expected, plus the deadline for sending the old phone.
Prepare the old phone
The FTC has specific steps before you trade in, sell, give away or recycle a phone:
- Back up your data so you can move it to the new phone.
- Remove the SIM card and any memory card. If you are keeping your number, ask whether the SIM can move to the new phone; if you will not reuse it, destroy it.
- Unlink the phone from your online accounts, and remove it from the list of trusted devices for any account that uses multi-factor authentication.
- Restore the phone to factory settings to erase account numbers, passwords, messages, photos and videos.
- If you use an authenticator app, set it up on the new phone before you wipe the old one.
Full details are in Wiping a Phone Before You Sell, Trade or Recycle It.
Document the condition
Trade-in values depend on condition, and disputes over grading are common. Take clear photos of the phone, front, back and sides, with the screen on, just before you pack it. Note the date you ship it and keep the tracking number.
Compare with selling it yourself
A private sale often pays more than a trade-in, but it takes time and comes with the scam risks the FTC warns about: buyers who pay with methods that can be reversed, or who ask you to ship before paying. A trade-in is simpler and safer. Get a quote from your carrier, from the maker if it runs a program, and from a couple of resale sites, then decide whether the extra money is worth the effort.
Think about the new phone’s lifespan
A trade-in deal is also a decision to buy a particular new phone. The FTC has found that many makers do not make it easy to learn how long a device will receive software updates, and it suggests checking the maker’s website or contacting the maker before you buy. A phone with a long update window will hold its value better when you trade it in next time.
If something goes wrong
If a trade-in is graded far below what you were promised, or promised credits never appear, contact the carrier or company in writing and keep copies. If that fails, the FTC suggests reporting the business at ReportFraud.ftc.gov and to your state attorney general.
When the phone is too old
The FTC notes that makers often stop sending software updates at some point, and suggests that if a maker tells you when updates will end, you find out whether it offers a trade-in or recycling program. An old phone with little trade-in value can still be recycled responsibly; see Recycling an Old Phone Safely and Responsibly.
The bottom line
A one-time trade-in payment is straightforward. Bill credits can be worth more on paper but tie you to a carrier, a plan and usually a locked phone for months or years. Read the terms, get them in writing, wipe the old phone properly and compare the offer with what the phone would fetch on its own.