iPhone? Check your iBudget

Brian J. O'Connor

iPhone? Check your iBudget

Lining up for a new iPhone today? Better check your budget -- and your credit -- first.

As gizmo-crazed Apple fanatics line up for the new iPhone 3G at Apple and AT&T stores today,they'll be paying a price for having the coolest new techno-goodie.

While the new 8-gigabyte iPhone 2.0 is priced $200 cheaper than the original 8-gigabyte iPhone, the service plan is now in line with AT&T's other smart phone prices. That means the cheapest calling plan is now $10 a month more than on the original iPhone, and text messages are at least $5 a month instead of free for the first 250.

Put it all together, and you'll be spending $360 more during your mandatory two-year contract to save $200 on the purchase price -- an extra outlay of $160.

Is it worth it? The new iPhone uses the faster third-generation (3G) networks, comes with an entire store of cooler applications (including 125 free ones) and has improved sound quality over the original iPhone, notes Sascha Segan, lead cell phone analyst for PCMag.com.

"The new iPhone is a very cool device," says Segan. "It's tremendously useful and it's fun. What it really is, is the Mac-micro. It's a full-fledged handheld computer capable of doing a range of things."

If you'll use the iPhone capabilities of Web browsing, music, video, acting as a mobile game console and social networking application -- and you can stomach giving your business to an inept outfit like AT&T -- then the iPhone may be for you. But if you just want a cool cell phone, there are better buys, Segan says.

"If all you want to do is talk on the phone, just get a simple free cell phone."

Another thing to note before you head to the store is your credit. If it's spotty, you'll need to put up a $250 deposit before the iPhone folks activate your precious techno-toy. That's the way it was with the original iPhone, too, but now, thanks to the ongoing global credit crisis, your credit may have taken a hit without you even knowing.

If, for example, your credit-card issuers or home equity lender lowered your credit limits or you've closed accounts, your credit score may be lower. If you're asked to pony up a deposit, check your credit reports (at www.annualcreditreport.com or 877-322-8228 and NOWHERE ELSE!) before you assume there's been a mistake.

You'll also have to fork over $200 extra if you're an existing AT&T wireless customer with a service contract that's run less than 18 months. Over at AT&T they call it "an early upgrade fee," and it hikes the price of the $199 8GB iPhone to $399, and moves the $299 16-gigabyte model up to $499.

You'll need a few other things to get your iPhone: a credit card, your Social Security number, a valid, government-issued photo ID, and your AT&T wireless account number, or the PIN and password to some other wireless provider if you are switching carriers. Go to ATT.com to check whether your old number can be moved.

There's also a $36 activation fee if you're new to AT&T, or an $18 "upgrade fee" for existing customers, who already should be used to AT&T's nickel-and-diming. (And speaking of that, remember to check any cancellation fees from your current carrier, too.)

Your final decision to make about the iPhone is whether to line up today or wait a while.

Segan says if all you want is the sleek, curvy iPhone, wait. All the activation will be done in stores, so there'll be a wait today. But if you want to hang out with a whole crowd of totally geeked Apple fans, go ahead and get in line.

"Does it really matter if you get your cell phone at Hour 1 or Hour 12?" Segal asks. "You're going to have it for two years. No one should ever camp out for a cell phone -- that's nonsense. But the people who are camping out are camping out because they want to have a cool Apple experience with all the other Apple people."

You can reach Money & Life Editor Brian O'Connor at (313) 222-2145 or boconnor@detnews.com.