Don't Waste Your Money: Free IPhones come with a hidden cost

Many major phone carriers are offering free iPhones when you open a new phone line or upgrade an existing phone. 

Consumer Reporter John Matarese investigated how carriers are able to give away a phone worth $800-$1000.

The short answer is that they can't. Oftentimes, an upgrade to a more expensive plan is required, sometimes to the most expensive plan option.

For example, with AT&T a free phone is only available to those with the "unlimited extra" plan. So many customers upgrade their line and spend an additional $25 to $45 a month. This means they are essentially paying monthly for that "free phone". 

In addition to the increased monthly bill, extra fees add up quickly. The activation fee is 30 to 50 dollars. Tax is 10 dollars. A case and screen protector for the new phone, another 40 dollars. Those extras add up to 100 dollars - making the phone anything but free. 

The bottom line is, cell carriers cannot afford to give away thousand-dollar phones for free. 

John Matarese says, don't waste your money.