Evaluating Your iPhone 11 Purchase Options

Last night I used the Apple Store app on my iPhone 6 to set up the trade-in, payment program, and iPhone 11 purchase. It ran a credit check to pre-approve the payment program. This morning at 5am all I had to do was click “complete purchase”. I don’t remember the exact wording because it was 5am and my eyes would barely focus. On the first few tries I got a message saying the trade-in program wasn’t currently available and to try again later. But after five or so minutes of trying it went through and I went back to sleep. My new phone is supposed to show up on the 20th. All-in-all it was very fast and convenient. It even let me set up a Siri shortcut to check my order status.

I ended up going for the payment program instead of the upgrade program. I (obviously) don’t need to upgrade frequently and I’ve (knock on wood) been really lucky with my screen so I don’t want to pay for AppleCare+. I’ve only had one cracked screen since my iPhone 3GS.

I can’t believe I’ve been using the same phone for six years. Now I’ll have to read back through all the TidBITS articles about new iPhone hardware to remind myself of all the new stuff that’s been added since then. And drink a toast to my headphone jack as I box my iPhone 6 up for the return.

I think Josh’s article sounds very reasonable, but I have to admit I still don’t like the idea of paying off a new iPhone with a plan. Interest or no, I think there’s something to be said for the type of financial freedom you obtain when you don’t have unnecessary debt or obligations. I can pay for an iPhone upfront. Is there an advantage to paying it off over the course of 24 months? What I imagine is a situation where I manage to destroy the phone. Now I’ll be paying off a device that doesn’t even exist anymore. Feels just outright cringe-worthy to me.

Ironically, I would definitely use such a plan for a work Mac. That’s a $3k+ investment I know will run for at least 2-3 years and experience tells me is not prone to being destroyed (repairs sure, but not outright loss). I’d be more inclined to buy that on a 12/24-month installment plan (especially one that’s zero APR) than an iPhone.

I’m not convinced about the trade-in either TBH. Take for example my old 64 GB iPhone 6. Apple would give me $60 for it. Not a big chunk compared to the cost of a new iPhone. Now while that old 6 has little market value, it has a lot of value to me personally in that it is my insurance that if I never need my new iPhone serviced and Apple’s turn-around goes beyond a few hours, I’ll have a spare phone to bridge a couple days. That peace of mind is to me worth more than the $60 Apple would give me for it. I guess the counter argument would be that you could always buy a brand new iPhone to use essentially as a loaner and then return it within 14 days for full refund. Apple is indeed absolutely great about that.

Even if you do have the funds to pay for something in a single lump sum, it can make sense to go for monthly installments: the key concept here is “opportunity cost:” you can only invest the money you have, once, so you should try to maximize the return you get from all possible investment of a given amount.

If you pay full price, the money is — obviously — instantly gone.

If, however, you have an option to pay with monthly installments at 0% interest, you could put some of the money into an account that pays you interest, and just transfer each monthly installment from that account to the seller.

However small the return on that investment would be, you’d still always effectively pay less than the full price tag for the product you’re buying (assuming, of course, that the transfer, etc. would not incur any fees.)

The iPhone 6 was released in 2014, five years ago, not six. Still a pretty good run

Hehe, that’s certainly true in theory. In reality, my checking account currently offers 0.01% interest. Over 24 months, that makes 10¢ profit on the money I’d spend towards a new iPhone. Not quite worth the effort. Now of course my super low-expense ratio ETFs make 6% per year on average, but that estimate isn’t really honest either, since the only reason my earnings average that high is because I can afford to leave those ETFs there for many many years (until I plan on retiring actually). If I know I have to have access to those funds on shorter time scale such as 24 months, I can’t assume those kinds of gains are realized.

The opportunity cost is of course a real thing and your argument is certainly valid, but I would go so far as to claim that on a comparably small purchase like this, with considerable risk of loss of the entire investment (I manage to drop my brand new iPhone down the gutter), in practice I just don’t see a significant enough benefit. I do, however, get a warm fuzzy feeling knowing that I don’t have another creditor on my balance sheet when I pay it in full. Your milage may of course vary.

I’m still using an iPhone 5 , so almost 7 years. I am looking closely at the iPhone 11 Pro though.

That would explain why I couldn’t believe it. I was counting years by model (6S, 7, 8, X, XS, 11) but I forgot that the 8 and X were released the same year. I should have double-checked with Mactracker before I wrote that.

A loss is a loss, whether you paid in full or in installments; perhaps it would feel worse to be paying installments for a phone you don’t have anymore.

Again, feelings. My wife’s phone was paid off in installments to Verizon (zero interest), it was a nice feeling when her phone bill went down; from then on, however long her phone lasts, it’s like getting it for free.

If the zero interest phone installments are paid through the phone bill and if one routinely keeps as much money as possible in an account that earns non-negligible interest (a number of online savings accounts are at 2% or more), it takes no effort to earn some more interest rather than pay for the phone in full. With the two options, pay in full or in installments, either can bring positive or negative feelings depending on your perspective but only one of them will also bring, say, twenty bucks you wouldn’t otherwise have.

Meh. I’ll just stick with my 10th Anniversary SIM-free iPhone 10, thank you very much.

I’m on T-Mobile, which wasn’t covered in the list of carrier upgrade options. They offer the standard two year no interest purchase plan, but their trade-in allowances are more generous than Apple’s for older phones. My iPhone 7 is worth $350 at T-Mobile, as is everything up to the XR. The XS is worth $500, and the XS Max $550.

One reason not to sign up for AppleCare is that some home policies and some credit cards cover phone damage. For instance:

. . . Coverage is for damage or theft up to $800, with a $50 deductible, up to $1,000 per 12-month period. Must visit www.mycardbenefits.com or call 1-800-Mastercard to file a claim. Coverage provided under a group insurance policy issued by New Hampshire Insurance Company, an AIG company. Policy provides secondary coverage only. Protection applies to up to three cellphones, the primary line and up to the first two secondary lines on the covered phone bill. Certain terms, restrictions and conditions apply. Visit reimastercard.com/phone for details.