 With today’s announcement of the iPhone 13, you might be contemplating an upgrade to the latest and greatest that Apple has to offer. But with a price tag that can go as high as $1,599 if you get the most expensive, top-of-the line iPhone Pro Max, you may be looking for some options to make that upgrade easier to swallow. Personally, I have used Apple’s Upgrade Program for years and it has worked great for me. However, Apple now also offers financing using their own Apple Card as well, and this method has some benefits, too. Let’s break down these two options and see what might work best for you!
To be clear, there are other financing options out there, and your specific carrier will definitely have alternatives, but I’m only going to look at these two financing options direct from Apple as they both have unique pros and are available online even if you don’t have a nearby Apple store. First and foremost, the good news is that both the iPhone Upgrade Program and financing using the Apple Card are interest free. This is important! In general, borrowing money can be a useful tool, but the downside, especially with credit cards, is the interest you pay. Buying an iPhone on a regular credit card and paying the minimum balance on just that purchase until it is paid off would come with a much heftier price tag than Apple already charges for the device. When Apple first launched the iPhone Upgrade Program in 2015, I was immediately intrigued. As someone who worked in the financial services industry, the 0% interest rate on the loan was immediately appealing. (The loan itself was offered through a third party, Citizen’s One, and they handled all payment processing.) I was also excited about the titular Upgrade option. The loan term was 24 months, but after making 12 months of payments, I could turn in the phone to Apple and the rest of the loan would be paid off. At that point, I would start the process over with the newest iPhone. I signed up and bought the just-released iPhone 6s Plus and a year later was able to upgrade to the iPhone 7 Plus. Although I had never been one to upgrade my phone on a yearly cycle, this was a cost effective way to treat myself to Apple’s latest and greatest tech. But over that next loan term, I reverted back to someone who didn’t feel the need to upgrade their phone every year. The loan I took out for the iPhone 7 Plus? I never took advantage of the upgrade option, and simply paid off the full term of the loan, meaning I kept the phone as well. I still have it in a drawer somewhere, making it a great emergency backup phone should I ever lose or break my current phone. I did the exact same thing for my next upgrade, the iPhone XR (which is still my current phone, and also paid in-full). Even without upgrading, this was still a great deal because I was paying no interest and got a slight discount on AppleCare+ (Apple’s added insurance program that discounts screen replacements and other repairs) which is included with the monthly payment, giving you a little extra piece of mind. This seemed like a reasonable way to continue purchasing iPhones for the foreseeable future. If Apple released a new phone from year-to-year that I just had to have, I had the option to upgrade if I wanted. If not, the Program was still a great way to finance the phone over time, to not pay an exorbitant amount of interest, to not rely on carrier financing, and still get a discount on AppleCare+. But Apple has now added a new option to finance your iPhone purchase using their own Apple Card. (In all fairness, it is technically a Goldman Sachs credit card, the equivalent of Chase’s Amazon.com store credit card. Though Apple controls the experience much more tightly than any other store credit card out there.) The Apple Card Monthly Installment plan can also be used to purchase other Apple hardware such as AirPods, iPads, and Macs. You can even pick up one of Apple’s silicone or leather phone cases for your new iPhone 13 using the Installment Plan! The Apple Card Monthly Installment plan breaks down the purchase price of the iPhone into 24 interest-free monthly payments just like the iPhone Upgrade Program. Unlike the iPhone Upgrade Program, the Apple Card Monthly Installment plan does not include AppleCare+ by default, thoughit is possible to add it into your monthly payment if you choose. Apple even offers the same discounted price for AppleCare+ if you bundle it into your payment that they do with the iPhone Upgrade Program. The main difference here is that you do not have an upgrade option after 12 payments have been made, and the full balance of your phone will need to be paid off in full. At first glance, this might seem like a worse deal since there is no upgrade option. So why would this option be appealing? The big selling point for using an Apple Card is the 3% cash back you get on all Apple purchases using the card, which still applies to purchases made using the installment program as well. You can apply that cash back straight to the balance of your card, meaning you got a 3% discount on your phone, or utilize it the way you would other cash back rewards (I like to save credit card rewards for vacation,but you can also use them for groceries, or just a rainy day - anything really!). And if you are like me and don’t always want to upgrade your phone every year, this can be a fantastic option. Both of these iPhone financing options have great pros and limited cons, depending on what you are looking for. All you need to decide is if you prefer having the option to upgrade your phone every year or if you are OK holding onto your new phone for two years (or more!) and would rather have some cash back in your pocket. Which option do you think would work best for you? Things to know: with both options, taxes and shipping must be paid up front and are not calculated into the monthly payment. Approval for both financing options is dependent on your credit worthiness.
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 I will admit it: before I began my career in banking, I was pretty oblivious to most banking concepts and terminology. Sure, I knew what a bank account was, I knew how to use an ATM, and I definitely knew how to use my credit card, Even as I sat in the training for my first banking job I had to Google things on the sly to make sure I knew what was being talked about. What is a money market and what makes it different from a savings account? What are savings bonds and how do they work?
My biggest confession? I didn’t quite know what money laundering was. While I enjoyed picturing a bag full of money running through the soapy bubbles of a washing machine, I knew it wasn’t that. Mobsters in movies were always being accused of it. But what did it actually mean? I am here to help you. Here is my guide to all the banking terms you should know but are way too afraid to ask about. APY: Have you ever seen these letters on big posters inside your bank or credit union? Similar to the interest rate, APY, or Annual Percentage Yield, is the money you make back from the bank on the money you have in your account. Basically the bank pays you for keeping your money with them. The only difference between APY and the interest rate is that APY takes into account the compound interest. Most institutions offer 0.06% on saving accounts right now, but there are accounts out there offering much more. Oftentimes, the more money you deposit (see Money Markets) or the more time you are willing to deposit (see CDs) the higher they APY and the more money you can make. While that sounds like a great money making scheme, it’s often not a lot of money. For example, my current institution has a rate of 0.1% on savings accounts. If I hold $100 in there at the end of the year I will have made a whopping ten cents. A higher APY is always a great idea, but also be aware of deposit minimums, time limits, and other conditions that may apply. Bank: I will admit that when I started banking when I was in high school I did not know the difference between a bank and a credit union (see credit union below). I honestly thought they were interchangeable. While we often use them somewhat interchangeably, they are quite different. The easiest way to talk about a bank is like a company. The sole reason they are in business, like all companies, is to make money for a group of shareholders. There are often people who have some sort of investment in the bank and expect a share in its profits in return. CD or Certificate of Deposit: A CD is really just a fancy name for a strict, but often beneficial savings account. If you have been shopping rates you will notice that CD rates are often much higher. The deal is that you agree to keep a certain (often large) amount of money in the account for an agreed upon term, and in exchange you will see a higher rate of return. Most commonly CDs have a strict policy of no money in or out during the term and will charge a fee, or penalty for doing so. There are a few CDs out there that have a one-time rule where you can withdraw or deposit money once during the life of the deposit penalty free. Checking Account: While the name is pretty outdated at this point in time, this is the account pretty much everyone has. It’s the transactional account where you put and spend your money. Most now use a debit card, not checks, to facilitate money into and out of the account. Commercial Banking: Commercial is the fancy way of saying banking for business. Some institutions will have a small business and a larger commercial department that are seperate, but most will group the two together. This could be everything from a non-profit account to your Etsy store to large corporations. Compound Interest: Compounding interest quite simply means that you are taking the interest you make at a given period, add it to the balance, and then that interest will earn interest in the next period. Say you have $100 in your savings account at the very gracious rate of 10%, at the end of the year you will have earned $10. That money would be added to the balance and you would now have $110. The amount then used to calculate interest on that $110 so the following year you would make $11. Compounding can happen by year, month, even day, so you will want to understand the compounding period for your account. A smaller compounding period may be better than a higher interest rate. Consumer Banking: Consumer banking is just personal, individual banking. Credit Union: While credit unions offer the same services as a bank, they are structurally different. The key word being union. A credit union is a large group of very small shareholders, namely account holders, who pay a small sum to use the credit union in return for the services. Credit Unions are not for profit, which means when there are profits, they have to reinvest profits back into the company in some way. Direct Deposit: If you are shopping for accounts I am sure you will notice that many institutions offer perks for having a direct deposit. It simply means you have some sort of regular and automated deposit going into your account. Most of the time this is your paycheck. Interest Rate: Like APY the interest rate is going to tell you how much money you are going to earn on keeping your money in your account. The only difference is that interest doesn’t take into account compounding. When shopping for an account you will want to keep an eye out for both the interest rate and the APY. Maturity: Maturity means the end of a term on an account, usually CDs. When accounts reach maturity it means you now have the chance to access those funds penalty free and you can decide you take your money, or reinvest again in another CD. MICR: This is by far one of my favorite banking words, it’s fun to say and write. MICR stands for Magnetic Ink Character Recognition. In short, it’s the quirky numbers at the bottom of your check (and sometimes other things) and it allows machines to quickly read and understand the numbers. Known as the MICR line, the numbers represent the transit routing number of your bank, your personal account number, and the check number you are using. Money Laundering: Now that I have you picturing running your money through the wash let's get to the heart of what money laundering is, besides plot points in mob movies. When money is part of a crime, think drug trafficking, it can be pretty obvious to the authorities. So criminals try to find ways to filter that money through banks or other legitimate sources like businesses, to try and make that money appear legal. This can be through organized crime, like in the movies, but it can also be things in “white collar” crimes like tax evasion. Money Market: Money Markets are checking and savings accounts that are a little stricter than your usual savings and checking accounts. Oftentimes Money Markets are often high dollar and low transaction accounts where the holder is rewarded with higher interest rates. Savings Account: Just as simple as it’s name, it’s the account for your savings. They usually have a little bit of earning power and very few transactions. Savings bonds: If you were like me you received these as kid. The easiest way to describe them is a loan you make to the government. Yep, you give the government money and make money off the interest. They are made in someone’s name and they mature over a period of time, up to 30 years. There are two types: EE that has a fixed or variable rate and is guaranteed to double by the end of the 20 year maturity. Series I has a fixed rate, but also an inflation-adjusted rate, which basically makes sure that your money continues to grow on par with the rate of inflation. You can cash them out before maturity, but if you do so within the first 5 years who pay a penalty of 3 months worth of interest. Simple Interest: Simple interest is the opposite of compound interest. Instead of reinvesting the interest and adding it to the balance, the interest earned is instead given back to you. So if you have that same $100 at 10% interest, at the end of the term you will receive the $10, your original $100 will go on to earn another $10 for the next term until it reaches maturity. Statement: Statements are a monthly record, sent to you, of all of your transactions for the month. In the days of online banking they seem outdated and yet you still need them when it comes to things like home buying. The good news is most institutions will deliver them electronically which means they are easier to store and find later, not to mention it is far more environmentally sound. A lot of times lately institutions will have what they call a Statement Account, which can be either transactional or non-transactional, but is really just meant to be an account to connect all your accounts together and generate that monthly statement for you. Transit Routing Number: Located in the MICR line at the bottom of your check, this is the unique identifying number of your bank. Not only is this used with checks, but it is also used with bank transfers. You will need it to set up direct deposit, some automatic debits, and transfers. This number isn’t really a secret, any good institutions will have this easily accessible on their website or on your statement. Beware though, larger institutions (Wells Fargo, I’m looking at you) will have multiple, so be sure that you are using the correct one. See? That wasn’t too bad? Now you are a personal banking rockstar and you can confidently head into your bank now. What other terms should we cover? Let us know in the comments. |
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