Buying the iPhone 5? Here's What to do With Your Old iPhone

Options for making the transition as smooth as possible.

iPad and iPhone
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Rumor has it that Apple could be announcing the iPhone 5 later this week. Already, iPhone users are trying to sell their old phones in an attempt to capitalize on pre-launch buzz and get the best price. If you already have an iPhone and are tempted to buy the latest model once it comes out, be sure you delete all your photos and data before selling or trading in your old phone.

"Restoring an iPhone to default settings will get rid of most of your stuff," says Jon Rettinger, president of the gadget review site TechnoBuffalo.com. "I recommend doing two complete resets and making sure all of your account information is no longer linked to iTunes, photos are all gone, and personal information is all wiped. You can restore to factory settings function in iTunes and set it up as a new phone."

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Rettinger also suggests backing up your old iPhone to make the transition as seamless as possible.

Here's a look at options for your old phone.

• Keep it. Hype aside, if your current iPhone still works and you aren't due for an upgrade, consider holding onto it for now. You'll save yourself money and time spent waiting in line. Although trade-in prices for the iPhone 4 are high now thanks to steady demand and you may get less money for selling your iPhone later, Rettinger says waiting could ensure a smoother transition because you won't be without an iPhone or be rushed to send off your old one.

• Donate it. Several organizations sell phones to raise money for charity, and some wireless providers have their own initiatives. For instance, AT&T collects cell phones for the nonprofit Cell Phones for Soldiers, and HopeLine from Verizon provides donated phones to domestic violence victims and survivors. SmartPhones4Good offers postage-paid mailing labels for donating smartphones by mail and donates proceeds to the charity of the donor's choice. As Rettinger points out, you could also sell the phone yourself and donate the proceeds to whatever charity you choose.

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• Do an in-store trade-in. The advantage of an in-store trade-in is "you get a value for your device and conduct that transaction right then and there," says Jeff Trachsel, chief marketing officer of NextWorth.com, which runs an online trade-in program and Target's in-store electronics trade-in service. "In-store trade-ins take the guesswork out of it." The amount and type of compensation (cash or gift card) you'll get varies depending on the retailer, the condition and memory size of your phone, your wireless carrier, and a few other factors, like whether you have the original box and accessories.

If you're unhappy with the price offered in a store trade-in, you could simply take your iPhone elsewhere, which you couldn't do with an online trade-in. Target's in-store and online trade-in program offers store gift cards, as does Best Buy's Trade In and Save program. According to the retailer's websites*, RadioShack offers up to $300 for a working 64GB iPhone 4s, while GameStop offers up to $360 in cash or a gift card. Apple's own recycling program offers an Apple gift card of up to $345 for a 64GB iPhone 4S in excellent condition.

• Sell it online. Selling your iPhone online may be convenient, but be wary of prices that sound too good to be true. "A lot of scam sites offer $500 or $600 per iPhone," says Rettinger, who suggests sticking to reputable sites like Amazon's Trade-In program (which offers up to $420 for a white 16GB Apple iPhone 4S in perfect condition), Gazelle.com (which offers up to $277, depending on the model), and NextWorth.com (which offers up to $300, depending on the model and has a price lock now through October 1).

[See 5 Ways to Earn Money With Your Phone.]

Rettinger also points to USell.com, which offers a comparison of phone-selling options. "This is a good place to compare offers from various resellers, but most of the sites it lists are low- to mid-tier, so expect either less money or potential problems with customer service," he adds. Depending on the site, you may be on the hook for shipping costs, and unlike store trade-ins, you generally can't get your iPhone back if you disagree with the trade-in price they offer.