Read This Before You Buy a New iPhone

Coveting a shiny new iPhone, but don't want to shell out the cash? If you have an older model, you may be able to get enough cash or store credit for it to cover the cost of an upgrade.

By selling my old iPhone on eBay, I've been able to score a new phone nearly every upgrade cycle for free -- and often made enough extra money to buy a shiny new case as well. (Yes, I had to re-up my carrier contract, and you will, too, to get the best deal on the new phone.)

The beauty of this little swap game is that you don't even need a newer iPhone to make it work for you.

What you can get for your old phones
To show you what kind of cash is waiting for your old phones, I shopped around a 16GB iPhone 5, my 16GB iPhone 4S, and my editor's old 16GB iPhone 4 and 16 GB iPhone 3G to see who's offering the best prices.

(The following prices assume the phone is in good condition, with normal signs of wear. I also assumed that the phone was not factory unlocked. These phones are generally worth a lot more, but they are much less common.)

Get cash
You'll get the best prices on eBay, but you'll need a stellar seller rating (or a friend who's willing to sell for you) and the patience to take lots of photos and write up a detailed description of the phone, as well as to package and ship the phone once it's sold.

As with all our resale options, the better condition your phone is in, the more you can get for it. But even dead or damaged items will sell for parts. Just be very clear about your phone's condition.

According to completed sales listings, I could get between $240 and $300 for my 4S, my editor's 4 would command $150-$205, and her 3G would bring in $20-$70. An iPhone 5 in excellent condition could go anywhere from $375 to $500 or more.

Don't have the patience for eBay? Try Gazelle.com, which also offers cash for phones. You'll have to mail in the item (shipping is free), and you take the chance that Gazelle's evaluators may assign a lower value than is provided on the website.

The prices are lower than eBay's, but Gazelle is trustworthy and the process is a breeze. My 4S would get me $190, the 4 would earn my editor $115, and her 3G would bring in $10. A 5 in good condition is worth $310. (These prices are good through Oct. 31. You can lock them in now and then send the old phone once you've gotten your new one.) Gazelle also accepts non-working iPhones.

Get credit
Apple's recycling program offers great prices for old iPhones, but you get the money in the form of an Apple Store gift card, so it's best for those who are definitely upgrading.

Like Gazelle, you get an estimate online based on information you provide about the condition of the phone and mail it in to get your credit. Unlike Gazelle, broken phones won't get you any cash, but you can recycle them for free.

This is the option I'm going with. I can get $215 for my 4S, enough for a brand-new gold 5s. My editor can get $135 from Apple for her 4 (enough for a candy-colored 5c and change), but sadly, her 3G is deemed worthless.

Amazon.com also offers a similar program, though it's much harder to get a sense of your exact trade-in amount. I have used Amazon's trade-in program for everything from books to video-game systems and always found the prices fair and the process painless. This is a good option if you want the ease of Apple's trade-in program without being locked into buying its products.

If you want the best deal, opt for the trade-in program and take your money in the form of an Amazon credit. (You can also sell the phone for cash, but you'll probably get quite a bit less for it.)

The iPhone 5 is worth $292-$344, I could get up to $205 for my 4S, the 4 falls in the range of $90-$135, and the 3G would get $20-$35.

Beware of in-store buybacks
You may have heard that Best Buy and Wal-Mart are offering in-store iPhone swaps -- sounds easy right? Just print this out and bring it with you when you go, as the prices offered from the big-box stores are often quite a bit lower than what you can get through a mail-in trade program like Apple's or Gazelle's.

That's not to say you can't get a good deal – and it's tempting to walk out with a new phone the same day -- but be sure you know what your device is worth so you can make an informed decision.

Whatever you do, don't let those old iPhones sit around in a drawer unused -- the longer you wait, the less you'll get. Happy upgrading!

The best-kept secret of the smartphone wars
Want to get in on the smartphone phenomenon? Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits no matter who ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further."


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 28, 2013, at 9:52 AM, danmx1 wrote:

    Gazelle? really?, you're better off selling it in a pawn shop.

  • Report this Comment On September 28, 2013, at 10:19 AM, beachinvest wrote:

    Selling you old phone to an online reseller requires some research. I sent one phone to MaxBack. They disagreed with my estimate of quality and offered me a lower amount. I declined and they promptly sent my phone back. Very professional.

    By contrast, SecureTradeIn (which appears to be a division of ReCellular), took the same phone (They did offer a supiciously high value estimate), declared it "totally busted" when they examined the perfectly-functioning device and I never heard from them again.

    Word of caution, check prices. Something out of whack is probably a scam. I do believe Gazelle is honest, but their prices are among the lowest.

  • Report this Comment On September 28, 2013, at 1:47 PM, WineHouse wrote:

    Amazing. Even if Apple is "only" offering $215 "trade-in" for the 4S 16-Gig model that I just got in July through Verizon for $99 plus a 2-year contract (truly sorry that I didn't wait, of course), that's a 50% compounded annual return over the two year wait period (assuming that they'll still pay that much in 2015). Even if they only offer $135, that's a 15% compounded return over the two year hold period.

    Of course, they'll recondition the phones and re-sell them as "cheap" iPhones in emerging market countries.

    You didn't really ever think that they would come out with brand-new cheap phones, now did you?

    And you didn't really want them to come out with brand new cheap junk phones, either, I would hope.

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