This week, Apple introduced the world to the iPhone 7. Much has been written about the death of the headphone jack. But I want to focus on the “special financing” advertised on the Apple website. You can pay no interest for six months (on purchases of less than $499), no interest for 12 months (on purchases equal to $499 and less than $999) and no interest for 18 months (for purchases greater than or equal to $999). Apple has partnered with Barclaycard, a division of Barclays , to offer a credit card that can be used to finance the purchase.
However, all three of these offers come with one big condition: no interest if paid in full during the promotional period. If you do not pay the balance in full during the promotional period, you will get hit with a retroactive interest charge at the standard purchase interest rate. If you don’t pay off the balance in full during the promotional period, you aren’t actually getting a promotion at all. The interest rates on the credit card range from 14.24% to 27.24%, so the retroactive interest charge could be significant.
If you are looking to finance your iPhone purchase, there are better deals available. People with good credit can take advantage of credit cards with longer 0% purchase offers and more generous terms. As of the publish date of this post, Citibank currently offers a 0% intro APR on purchases for 21 months with its Simplicity credit card. With Simplicity, the interest is waived during the promotional period, not deferred. If you have a balance remaining after 21 months, you would only pay interest on the remaining balance, on a go-forward basis. To find good 0% purchase offers updated regularly, you should shop online at sites like MagnifyMoney and NerdWallet.
The Problem With Deferred Interest Promotions
The CFPB remains highly concerned with deferred interest products. According to Director Cordray, “deferred interest products remain the most glaring exception to what has been the generally positive post-CARD Act trend toward upfront credit card pricing.”
source : forbes.com