If your phone is starting to show its age, an upgrade is probably on your mind. You may feel like the best option is walking into your local carrier's store and letting them set you up with a new phone. You know it's convenient, and the monthly payment looks manageable with your postpaid phone plan.
The problem is that a carrier upgrade will lock you into a long device installment plan, forcing you to pay for their most expensive phone plans for up to three years.
There's a better option: You can use your tax refund to purchase an unlocked phone from the start.
You'll avoid expensive plans, long device installments, and have the flexibility to change carriers whenever you want.
What a carrier upgrade actually locks you into
When you upgrade through your carrier, the device cost gets folded into your monthly bill as an installment plan that's typically spread over 24 to 36 months. To sweeten the deal, carriers often apply bill credits that make the phone look free or heavily discounted.
The problem is that those credits are tied to your plan. If you try to switch carriers before the term is up, the credits stop. You must then either pay off the remaining balance in one lump sum or give up and stay put.
For most people, that means staying put on a plan that includes far more data and features than they really need.
Why buying outright with your tax refund changes the math
By buying an unlocked phone from the start, you avoid device installment plans that lock you into one expensive phone plan for several years. You have the flexibility to switch carriers and look for the best deals on service.
That said, flagship phones aren't cheap. The latest iPhone, Google Pixel, and Samsung Galaxy models run anywhere from $800 to $1,000 or more. You may also have to pay off your old installment plan (which may be a great use of the rest of your tax refund).. All of these costs are a steep price for most people, but it's perfect for the average tax refund.
The average 2026 refund is just over $2,000. That's enough to cover a flagship device outright and have money left over.
From there, you're free to shop for a plan on your terms. MVNOs like Visible, Mint Mobile, and US Mobile offer unlimited plans starting as low as $25/month. Compared to the $80/month or more cost of a typical postpaid plan with a device installment baked in, the savings add up quickly.
Where to buy an unlocked phone
You may think that carrier stores are the only place to get a new phone, but you have more options than you realize.
Apple, Google, and Samsung all sell unlocked devices through their own stores and websites. If you want to shop around, retailers like Best Buy, Amazon, and Walmart frequently run competitive deals. They may even offer financing if you'd prefer to spread out the cost without involving your carrier.
Here are some things you should consider before buying:
- Confirm it's actually unlocked: Most manufacturer-direct and major retailer purchases come unlocked, but you should still verify before completing the purchase.
- Previous generations have a lot of value: You don't have to buy the newest phone every year. Phones that are one to two years old have many of the same features as the newest models and are usually offered at deeper discounts.
- Look for open-box deals: If the latest flagship is out of reach, certified refurbished or open-box models from reputable retailers can stretch your refund further without sacrificing much.
The bottom line
If a new phone is already in your plans, your tax refund gives you the best path to breaking the carrier upgrade cycle. Buying the device outright lets you keep it unlocked and choose your plan based on what you actually need.
If you want to save even more, you should also look into buying an annual phone plan with part of your tax refund.
Max McCaskill
Sr. Staff Writer
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