Last updated on July 17th, 2020
If you’re considering whether to open an Apple Card in order to buy the new iPhone 11, there are a few things you should consider before hitting the “Submit” button on your application.
More than a Pretty (Card) Face?
Just one month ago, Apple had the web buzzing about the release of its sleek new credit card. Now, the internet is once again in a certified tizzy due to the annual announcement of the newest batch of iPhones – the 11, 11 Pro, and 11 Pro Max. The question on everyone’s mind, “Should I buy the new iPhone?” is now accompanied by a new query: should I get the Apple Card to pay for it? Before we dive into whether the Apple Card is worth opening just to finance a new iPhone – let’s take a look at the card itself.
A Quick Overview of the Apple Card
Boasting simplicity, transparency, and privacy, the Apple Card offers a seamless user experience centered around digital transactions. Requiring a credit score of Fair (640) or higher, the Apple Card owners will earn cash back through the following categories:
- 3% cash back on Apple purchases (includes Apple subscription services such as iTunes, Apple Store purchases, iCloud storage, etc.), Uber & Uber Eats, and Walgreens
- 2% cash back on Apple Pay transactions
- 1% cash back on everything else
While the laser-etched titanium card has had its share of criticisms, Apple definitely deserves credit for giving Apple-users a chance to cash in on the convenient e-payment method they already use on a daily basis. Even Apple-critics can’t deny that the friction-less user experience does a fantastic job of meeting the digital-centric needs of the modern shopper – leather and denim issues aside.
(Want an in-depth look at the Apple Card? Check out the article Is the Apple Card Worth It?)
Are There Any Downsides in Getting the Apple Card Just for an iPhone?
At first glance, applying for the Apple Card just to buy the new iPhone seems like a no-brainer. If you’re already deep in the Apple ecosystem, the Apple Card is inherently useful for funding the inevitable future iPhone upgrades, plus the day-to-day convenience of earning extra cash with Apple Pay. The 3% cash back with the Apple Card is essentially an automatic 3% discount on every new piece of Apple tech that you purchase. Although it’s not much, with the average iPhone costing $1000 that’s a guaranteed $30 back on your new iPhone – not too shabby of a return. So yes, it could absolutely be worth getting the Apple Card in order to cash in the new iPhone you were intending to buy anyway.
What if You Don’t Upgrade Every Year?
Are you a part of the growing trend of iPhone users who hold onto their phone for 1, 2, or even 3 years and bypassing the upgrade? If you are, the Apple Card could still be worth considering. Even if you only plan on using the card to upgrade your phone every few years, the card has no annual fee so there is no cost, financial obligation, or minimum spend required to make the card “worth it.” If you subscribe to any of Apple’s services (or upcoming ones such as Apple Arcade or AppleTV+) why are you still reading? Go out and get that 3% back before another iTunes Music payment hits! But— and this is a big but – if you’re planning on using a payment plan for a new iPhone, there’s a pretty significant consequence you should consider before getting the Apple Card.
The One Reason You Should Be Wary
What do the Apple Card, the Apple payment plan, and the Apple upgrade program have in common? This answer isn’t a fun one – a credit check. The iPhone 11 is a perfect storm that combines the demand for flexible payment options with the promise of an even better phone in the next iteration and wraps it all up in the brilliantly timed (and exceptionally tempting) arrival of the Apple credit card. For this reason, many Apple-fans are not only considering using the Apple Card as a way of financing their next iPhone but two other financial-assistance programs offered by Apple. Unfortunately, most people don’t consider that signing up for Apple’s various programs will have an impact beyond the bottom lines of their bank accounts. Sure, it’s convenient to be able to buy an iPhone today and worry about paying it off tomorrow. However, if you’re not paying attention, you’ll quickly find yourself with a triple whammy in back-to-back hard inquiries on your credit history.
Apply for the Apple Card if…
You should apply for the Apple card if you fully intend on sticking with Apple phones for the next few years and can afford the credit inquiry that an application will cause. If you’ve had less than two inquiries on your credit report this year (and don’t anticipating needing to invoke many others in the next two years), you have our whole-hearted approval to apply for the card. Did you want to partake in all three Apple programs – the credit card, the payment plan, and the upgrade program – but want to stay within the optimal number of credit inquiries? You’ll have to decide which applications you’d rather inflict hard inquiries. Is saving 3% on the iPhone 11 is worth forgoing the flexible payment option of 0% interest for 24 months or kissing the automatic upgrade good-bye?
Pros and Cons of Applying for the Apple Card:
- Pro: 3% cash back, which is a return between $21-$44 (varies depending on the iPhone model)
- Pro: Contributes to your overall credit score, which could improve your credit utilization percentage
- Pro: Has long-term use
- Con: Requires an iPhone to use, not viable for those who bounce between phone manufacturers
Pros and Cons of Applying for the 0% Interest Payment Option:
- Pro: Spreads payment out over two years
- Pro: No additional costs or fees
- Pro: Easier to accommodate a wider variety of incomes and budget
- Con: Very little benefit to your credit score
- Con: One-time loan, will require another inquiry for another purchase
Pros and Cons of applying for the iPhone Upgrade Program:
- Pro: Always able to own the newest iPhone
- Pro: Prevents the hassle of trying to recoup the cost (selling or trading-in) an older model
- Pro: Includes AppleCare+ (a $199 value)
- Con: Very little benefit to your credit score
- Con: Participants will always have a monthly bill from Apple until they choose to opt-out and pay for the phone outright
Final Thoughts: Yay or Nay on the Apple Card?
To answer the overarching question: yes, it’s worth applying for the Apple Card in order to earn 3% back on the newest iPhone. Since there the card has no annual fee – or any other fees, for that matter – there’s virtually no cost in owning it. Still, only the most loyal of Apple fans should even consider applying for the Apple Card. Use of the card favors digital use (versus the physical card) and therefore uninterrupted iPhone ownership. If you’ve ever entertained the idea of switching to Android, this card might not be the one for you. Aside from that, the only determining factor that significantly affects whether you should get the Apple Card to buy an iPhone (or not) is on whether you credit can afford the inquiry or whether you plan on enrolling in the payment or upgrade program.