Thinking about buying an iPhone 6 once it comes out later this year? Be prepared to figure out brand new purchase plans -- and possibly pay more overall.
Until recently, wireless carriers typically subsidized the price of your device. They would charge you $200 as a down payment, and then locked you into a two-year contract.
Depending which carrier you go with, you'll either pay nothing upfront and face a higher monthly bill. Or you will have to pick up the full cost of around $650, in exchange for a slightly lower bill.
Last year, T-Mobile ( became the first major U.S. carrier to )drop wireless service contracts. The other major carriers are starting to experiment.
Though you can still get a $200 phone with a contract through AT&T ( and )Sprint ( they don't advertise the plans, and it's difficult to sign-up on their websites. )Verizon ( still has the subsidized plan as a standard offering. )
Expect more changes when the iPhone 6 is released. Apple's new smartphone is rumored to be making its debut this August, and it's sure to spark a marketing frenzy.
Should you foot the bill for the entire cost of a new IPhone or get a deal with no money down?
Either way, you'll pay more than you're used to.
When you pay the full price for an unsubsidized phone, carriers will typically knock about $10 off the monthly wireless service plan. But the total cost of an iPhone ($650 for a 16 GB version) more than offsets the savings.
The average monthly cost of a no-subsidy plan with zero down is $28 more than if you pay $200 up front.
Over the course of a year, that unsubsidized plan will set you back about $75 more than the old-fashioned two-year contract plan, according to estimates from Macquarie Securities analyst Kevin Smithen.
That's why it's no surprise that cell phone companies are pushing their new no-contract plans. In addition to taking more of your money, it also means an end to the hefty upfront subsidies they were paying to companies like Apple ( and )Samsung (. )
By the end of the year, roughly 41% of all smartphone activations will be unsubsidized, according to Smithen. That includes three-quarters of T-Mobile's subscribers and roughly a third of the customers of Verizon, AT&T and Sprint.
That percentage will likely be much higher for the heavily promoted iPhone 6.
So you might want to ask your carrier for an old-fashioned $200 plan with a two-year contract if you want to buy an iPhone 6. If your cell phone company is pushing a different kind of plan with the promise of big savings, remember that there's more in it for them than you.