Early upgrade and trade-in phone plans: how do they work?

While the nature of phone plans have changed in the past few years – gone are the days when you signed up for a contract that was both phone and service in one, replaced by separate contracts for both – there’s no denying the fact that it’s just plain fun to unwrap and set up a brand new shiny phone. New phone envy is a real thing, people!

The problem with new phone envy is that you’re stuck on that contract for your existing phone, all while the shiny new tech gear sits in store, waiting for you to buy it. 

You can circumvent that issue somewhat by purchasing your phone outright, because then it’s yours and you can look to sell it to cover some of the cost of a shiny new device, but that does require having the full cost of the phone available upfront. For many of us, splitting the cost of a new phone over many months is the only way we can get a new phone, period, and that leaves you stuck with that device until the contract is up, right?

Not necessarily so. Two of the three big Aussie telcos have schemes that let you upgrade to a new device a little earlier than your contract term might otherwise suggest. Here’s what you need to know about each provider’s deals.

Telstra’s first offering in an upgrade plan style used to be called “New Phone Feeling”, largely revolving around keeping customers on contracts with a single set administration fee, but its modern incarnation, “Upgrade & Protect” is a little different. If you want the ability to upgrade via a phone that you get from Telstra on contract terms, you have to sign up to Upgrade & Protect when you get the device, and agree to a $15 per month fee for doing so.

What that gets you is coverage for up to two screen replacements a year at a fixed price of $99 per repair as well as the option to upgrade your device to a new one during your contract term. This works (and costs) slightly differently depending on where you are in your contract cycle and the condition of your phone.

Presuming your phone is agreed to be in good working order, if you’re in the final 6 months of a 12 month contract, or the final 12 months of either a 24 or 36 month contract, then you can upgrade to a new device for no additional cost at all.

If you want the same deal within the last 6 months of a 12 month contract, or before the final 12 months of a 24 or 36 month contract, you’ll have to pay an additional $99 fee to do so.

What about if your device is damaged? In that case – and presuming it’s not a screen fault, because you could always use Upgrade & Protect to get that specifically fixed – then you can replace a damaged device up to two times a year, but it will cost you  $249 to do so, on top of your Upgrade & Protect $15/month fees.

Yes, Optus’ upgrade deal goes by nearly the exact same name as Telstra’s, though one is technically using an ampersand while the other uses “and” in there. Presumably that keeps the branding lawyers happy.

 It’s a mostly similar deal too, with a $15/month fee added to your device repayment fees, though Optus is a little more flexible about when you have to sign up for it. Telstra states that it must be when you sign your new contract where Optus’ position is that it can be taken up at the time of signing the contract or within 30 days of the start of that contract.

Optus doesn’t bundle in any screen replacement service with Upgrade and Protect, but it does allow for a lot more changes to your phone contract (remember, this is separate to your mobile service contract; it’s just what you’re paying off on phone hardware), as you’re allowed to upgrade after as little as 30 days from signing up to your contract. If you return your device in the last 12 months of your payment plan in good working order, there’s nothing else to pay, though if you do want to upgrade with more than 12 months remaining on your contract term, a $99 fee applies.

All Upgrade and Protect returns have to be handled in-store by Optus staff, so you can’t set the process in motion online, though Optus does have an app for iOS and Android to help you assess the condition of your device.  If your device is lost or stolen, Upgrade and Protect is not going to be available to you at all. 

 If your device is damaged – or determined by in-store staff to not be in “good working order”, then a $249 fee will apply instead.

At the current time, Vodafone does not have an upgrade offer similar to Telstra or Optus’ Upgrade offers, though it does provide a simpler trade-in offer for older mobile phones, tablets or smartwatches, with value applied to future Vodafone contract bills.

In most cases, phone upgrade plans are all about convenience rather than value to speak of. Telstra’s offer of cheaper screen repairs is a nice value perk to be sure, but the main game here across both Telstra and Optus’ offerings is the ability to trade “up” to a new device… but you need to consider both the costs and what you’re giving up in return.

Let’s put this in some real number terms. First of all, if you’re looking at a lower cost mobile phone, and especially over a repayment term longer than a year, then either telco’s deal is poor value, hands down. You’re paying $180/year, so $360 over two years or $540 over three years over and above the cost of the phone for access to the deal, so anything below those figures is automatically terrible value. Given the way that mobile phones depreciate in value, arguably anything costing less than $1,000 outright isn’t great just on those terms alone.

That puts us more in premium phone territory, but there you have to consider the value of the device you surrender – which you’re not getting back – both in terms of what you’ve already spent in handset repayments and its realistic market value.

Your 2-3 year old flagship phone certainly isn’t worth what it was when it was new – nobody expects that – but it’s not worth nothing either. To put some numbers for comparison here, a Samsung Galaxy S22 Ultra (2nd hand) can be had online at the time of writing for around $600-$700. An iPhone 13 Pro Max (2nd Hand) runs a little more – Apple phones tend to keep their value a little longer – at around $700-$1,000 at the time of writing. 

 You’re not getting any of that value back at all. All of the handset repayments plus all those $15/month fees are being sacrificed in the name of getting your new phone. The money you’ve already spent isn’t in any way being applied to the cost of the new handset that you have to sign a fresh 12, 24 or 36 month contract to either. 

If you’re very close to the end of your handset contract repayment term, you’re giving up a lot of value right there. If you’ve got a little longer on your contract to go, the variables are different again, but then you are also committing to a fresh contract that you’re under for even longer, which limits your flexibility to switch to a new telco or a better value plan over time.

If you truly do want to only have the latest and greatest phones every year they’re released, then this is a way to do so without having to outlay the full purchase price all at once – but the costs do stack up, especially if you upgrade more than once, because then you could be shackled to a contract for a very long time indeed.