With price tags of $1,000—or more!—it’s hard to imagine buying a new iPhone outright. You could set up a payment plan with your phone company, but then you’re usually stuck with that carrier for two years. In some cases, you don’t even own the phone you pay for every month; it’s more like a lease.
Now Apple is giving you the option to cut the phone company out of the deal and instead tie yourself to, well, Apple for two years.
The company has rolled out an installment program that allows you to use your Apple Card online or at the Apple Store to buy an iPhone with 24 interest-free installments. If you don’t already have an Apple Card, you can apply at checkout. Here’s how it works:
- You pick out your new iPhone and pay with your Apple Card.
- You get 3% Daily Cash back—the norm for Apple purchases–right away.
- Each month, the interest-free installment payment for your phone is added to your minimum Apple Card payment.
- You can track your installment separately from the rest of your purchases inside the Wallet app.
If you buy before the end of the year, the company is offering a 6% cash back (instead of 3%) when you buy from Apple and pay with your Apple Card, according to CNBC.
Let’s do a little math. You want to buy an iPhone 11 Pro (256 GB) for $1,149. A 6% cash-back will “save” you almost $70, making your pre-tax price $1,080.06. Then you can break that amount down over two years.
It’s considerable savings from a brand that isn’t big on hosting sales. But is it truly a good deal?
First, there’s the issue of the Apple Card program itself. Because Apple and card backer Goldman Sachs are trying to serve a wider range of consumers than some elite credit cards, you may not get a credit limit high enough to be able to buy an iPhone with your Apple Card.
Then, there’s the whole minimum payment thing. Being able to track your installment payments within the Wallet app is helpful, but because your phone cost is added to your monthly minimum payment, you could end up with more debt.
If you’re making other purchases on your Apple Card and not paying them off in full each month, but a significant portion of your minimum payment is taken up by your phone installment, you could end up paying more interest on the rest of your purchases and need to take more time to pay them off.
That’s on top of having two straight years of phone payments, unless you make extra payments on your installment plan of your own accord.
If you only plan to use your Apple Card for Apple-related purchases, it may not bother you to have your phone payment lingering in your digital wallet. But if you plan to use Apple Card as your every day credit card, those interest-free phone payments could get lost in the fray.
This article was originally published on 12/10/2019 and was updated the same day to correct Apple’s temporary cash-back offer for cardholders.