Salesman outside a Verizon store that will offer the iPhoneIf you're planning on switching from AT&T to Verizon on Thursday and getting a redesigned and new iPhone 4, there are a few things to consider that could affect your finances: where to sell your old iPhone for the best price; how to erase your data so someone doesn't use it; if it's worth waiting until summer for the new iPhone 5; and most importantly -- if Verizon's phone is worth the price.

As we've written before, getting out of a two-year contract with AT&T can be costly -- up to $325 in an early termination fee (or ETF). There are all kinds of ways to get top dollar for a used iPhone so that you can buy a new one and switch to Verizon. But before selling your old phone for enough money to cover the ETF and pay for a new phone, it's important to erase your phone's data so that it isn't used to get into your bank account, commit crimes or do something as banal as read your e-mail or see your photos.

It's a lesson that former presidential candidate John McCain learned too painfully. Some of his campaign staff sold their BlackBerrys before removing e-mails and phone numbers, and reporters got the used phones.

"Anything that you keep on your phone that you don't want someone else to see, you want to be sure to remove it," said Mike Newman, vice president of ReCellular, a website that recycles and sells used cellphones.

ReCellular erases all data from the phones it receives, but it provides free information online on how to get rid of personal information such as contact names and phone numbers. ReCellular holds itself liable for any data leakage from phones it buys, and has a 100-point checklist of areas containing personal data that it erases, Newman said. Those areas include call history, memos, pictures, e-mail signature, IM password, website history and one-touch dialing.

Since a smartphone is like a home computer and can save a large amount of data, just deleting a contact list might not be sufficient, he said. Some phone carriers have e-mail addresses of the phone's owner kept on the phone, which can be difficult to find.

One easy step is to remove the SIM card, a portable memory chip that holds personal identity information. Newman said that two-thirds of his company's customers don't remove the card. Data will still be on the phone with the card removed, but it's a good first start.

While not wanting to name companies, Newman said that phone recyclers that send phones to ReCellular sometimes don't remove data on phones that they say they've cleaned.

Is the iPhone 4 Worth It?

Verizon uses different technology than AT&T, so you must buy an iPhone 4 that works with Verizon's CDMA technology if you want to make the switch. Verizon's prices are the same as AT&T's: $199 for 16 GB and $299 for 32 GB.

Apple releases new iPhones every summer, so with the iPhone 5 expected to be released in Summer 2011, it may be worth waiting four months or so to get a better phone, said Anthony Scarsella, chief gadget officer at Gazelle, a website that buys phones and other gadgets. "I think it's worth the wait," said Scarsella, who blogged about the Verizon iPhone 4.

But if you're intent on buying a new iPhone 4 from Verizon and making the switch now, there are pros and cons to consider, he said in a phone interview with WalletPop.

Pros:
  • Verizon has better coverage in big cities, which should mean fewer dropped calls than AT&T.
  • Verizon's phone can be used as a wireless hotspot, hooking up to 20 devices.
  • Verizon has an unlimited data package that it is offering for a limited time for $30 a month.
Cons:
  • Verizon's CDMA technology doesn't allow voice calls and data to be done at the same time.
  • No international roaming. If you travel abroad, don't count on Verizon.
  • It's not a 4G phone, either for AT&T or Verizon. Verizon will be using the 3G network. Its 4G LTE network is for Android phones only.
  • AT&T has 3G data for the iPhone, but it's faster than Verizon's data, Scarsella said. You may get more dropped calls on AT&T, but you'll be able to surf the Internet faster.
Where to Sell

If you are going to sell your iPhone 4, there's no rush, since they hold 60% of their value since they were launched in June 20910. But if you're looking to sell now, there are plenty of options. Verizon could sell 25 million iPhone 4 handsets in 2011, according to one estimate, making for a busy secondary market. Here are some to consider:

NextWorth is in 847 Target stores and also buys phones online. A company representative told WalletPop that it has seen an 18% increase in iPhone trade-ins since Verizon announced last month that it would be an iPhone carrier. Sales this week are expected to be 2.5 times higher than normal trade-in periods.

Verizon has the easiest way to trade an iPhone: Walk into a Verizon store and trade it in while signing up for a two-year service agreement. It's easy, but doesn't pay as much as online recyclers do.

The online marketplace eBay this week announced a two-week promotion that ends Feb. 22: It guarantees $200 for some of the most popular smartphone models and up to $450 for the AT&T iPhone 4. Called the eBay Instant Sale, it's advertised as being fast and easy -- taking as few as two clicks and less than 60 seconds.

James Gallagher told WalletPop that he sold his dead iPhone 3G in September on eBay for $180, and his wife's working phone for $187. After eBay fees and shipping costs -- one phone was going to Australia -- they netted $300 to help pay $550 for two new iPhone 4s, fees and cases.

Another eBay customer, Matt McCormick, said that he's had success selling broken iPhones, getting more than $300 for a completely destroyed iPhone 4 that didn't power up and had the front glass and back cover broken. A working iPhone should get $400 to $500 on eBay, said McCormick, who fixes broken phones. For an iPhone 3G, McCormick said that he sold a working one on eBay for $175 and a broken one that didn't turn on for $110. A used 3GS in good shape will sell for $250, he said.

Best Buy recently started a program to buy back gadgets so consumers can upgrade, but as reported on WalletPop this week, the program doesn't pay well.

Other recyclers to consider when selling used phones include Gazelle, ecoSquid and BuyMyTronics.com.

Aaron Crowe is a freelance journalist in the San Francisco Bay Area.

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