Where The Old Cell Phones Go
By Mari McQueen

(MONEY Magazine) – Did you think that free cell phone you got with your service contract was new? Surprise! Most giveaway phones are rebuilt, and dealers will tell you so, if only when asked.

There's a huge and growing wholesale market for used cell phones, which are refurbished and sold again--often to cell-service providers who give them away to customers like you. Used cell phones, says Herschel Shosteck, an independent wireless-market analyst in Wheaton, Md., are a $250 million industry in the U.S. Bob Hutchinson, president of the Wireless Industry Association in Houston, says that up to 3 million phones are traded each month at his organization's website alone.

The good news is that the burgeoning used-phone market gives you an excellent reason not to hand your old cell phone over to your teenager. You can often trade in your old phone for a discount on a service contract (Omnipoint will oblige) or a price break on a new phone (try Sprint PCS). What's more, some mom-and-pop cellular dealers will give you cash for your old phone: We found dealers in New York City and in Washington, D.C. paying up to $25 each.