Upgrading iPhones? What to do with the old one

Apple Inc.

Apple Inc.

(MoneyWatch) Post updated Sept. 18, 2012, at 12:37 p.m. With Apple (AAPL) scheduled to release its iPhone 5 commercially on Friday, at least one survey suggests that a majority of iPhone 4 owners will upgrade to the new device. 

Although the results probably aren't statistically valid because the sample is unlikely to be representative of the country, there are many people who qualify for an upgrade from their carrier. That's math speak for saying that the iPhone 5 will be a big seller.

But upgrades means there's an old phone -- likely an iPhone -- that could sit around, picking up dust (though if you're hard on phones or have been known to lose them, keeping a back-up isn't a bad idea). Instead of wasting the value that remains in the device, here are some ways you might put it to good use.

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Give it to someone you know
If you know a relative or friend who could use a phone but can't afford a top model, you can hand off your old iPhone. This is easiest if you have service from a carrier like AT&T that uses GSM phone technology. You'll know if there's a SIM card you can remove. Take your card out, delete any personal data remaining on the phone, and pass it on. Then you slip your SIM card into the new phone and you should be good to go.

If you use Verizon, things get stickier. The company uses CDMA technology, which means no SIM card. You'll have to talk to Verizon about passing the phone over to someone else.

Find a pro buyer
There are companies that buy used electronic equipment so they can rehab and resell it to other consumers. Usell.com is a marketplace that lets buyers and sellers do business. According to CEO Dan Brauser, consumers are typically "leaving a lot of value on the device," with several years' worth of useful service still possible.

Usell has seen a spike of volume in advance of the iPhone 5 announcement. What a used phone will get you varies. Brauser says that an iPhone 4S with 64 gigabytes of storage is the most popular of used iPhones at the moment and, in top condition, is currently bringing as much as $321 each. However, if you bought an iPhone 4S, you may not have an upgrade and would therefore have to pay full price for the new device, which means you'll be out of pocket hundreds of dollars. For example, an early but not full upgrade for AT&T to an iPhone 4S runs anywhere from $450 to $650. Prices on the iPhone 5 are likely to be similar.

The owner of an iPhone 4 would see at most $165 through Usell. So if you went from the 64 gigabyte to the 16 gigabyte iPhone 5 and had an upgrade (which probably means a $199 price tag), then your net cost would be $34. However, if there's a sudden flood of units on the market, expect the law of supply and demand to drive down the price you could get.

Usell isn't the only potential market. Gazelle.com, NextWorth.com, and Totem (hellototem.com) all directly buy used electronics.

Trade it in
A number of retailers have trade-in programs. Show them the goods and they'll show you the money -- only in the form of gift cards. Amazon (AMZN), Radio Shack, Staples, and Best Buy (BBY) all have trade-in programs. The details will vary with each. Some will take your goods at the store or online. Some are Web-based only.

In any case, you'll want to check multiple services to see what they offer. Also remember that you'll need to already plan a purchase at the retailer for the gift cards to be worth anything to you.

Head to eBay
If you want to get cash for your phone, an online auction site like eBay might make sense. A quick look at prices for a used iPhone 4 tied to a carrier seem to run between $200 and $300. However, it's an auction, so there's no guarantee, and you also potentially have to deal with fraud. The company does offer tools for sellers. If you go the eBay route, do some research up front and make sure that you don't leave yourself open to a scam.

Amazon also has its "Sell Your Stuff" program for individuals. Unlike eBay, auctions are never an option. The prices seem much higher on eBay, but there seem to be fewer used iPhones, which doesn't seem surprising on reflection.

Sell it to Apple
Apple (AAPL) has a recycling and buy-back program. The downside is that Apple only pays in gift cards, so you're restricted where you can spend your money. The good news is that it offers more per unit. For example, an iPhone 4 with 32 gigabytes of storage that is perfectly functional and has no light to moderate scuff marks or blemishes will command $185. If you're planning on more Apple gear anyway, this is something to consider.

Donate it
A number of charities accept cell phones and either sell them or give them to people in need. You don't get any cash, but -- if it's a legit charity -- you can get a tax deduction for the donation. It won't help lessen the sting of paying for a new iPhone, but it might help out others who don't have the luxury of upgrading to the latest and greatest gadget.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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