If you’re in the middle to upper-middle class, here’s why it’s better to use your Apple Card’s interest-free monthly installments to get the new iphone 12 pro max instead of paying cash for it outright.
Some assumptions before we begin
I say “middle to upper-middle class” because let’s be honest, if you’re upper class, you don’t need to do the interest-free monthly installments to get an iPhone 12 pro max because you can easily buy a thousand of them, plus a yacht, with cash.
I also assume you have an Apple Card in your Apple Wallet on your iPhone and have enough credit limit to get the new iPhone 12 pro max.
iPhone 12 Pro Max costs $1199 for 256 gb if you pay cash (plus tax)
Let’s be honest, you don’t really want the 128 gb iPhone 12 pro max because what’s the point of having such a powerful phone and not having enough storage for all the amazing pictures, videos, music files, you are going to create?
Also, having more memory space allows you to download the newest iOS updates without it slowing down your phone, thus prolonging the lifespan of your phone until maybe the iPhone 16 (4 years from now?).
Or $49.95 for 24 months with Apple Card
If you choose to pay installments with your Apple Card, interest-free, it’s only $49.95 for 24 months (plus tax).
That’s $49.95 x 24 months = $1199.
So yeah, the math works out that it’s interest-free.
Here are the 3 reasons why paying with Apple Card is better
Reason #1: Your income will generally go up during those 24 months
If you pay for the iPhone 12 pro max with with cash right now, you will be out $1200 right away.
But if you use your Apple Card’s 24 month’s interest-free monthly installment plan, you will only be paying $50 a month until it’s paid off.
Here’s why this is better for you.
Let’s say you’re making $500 a week in take-home pay, or $2000 a month.
If you pay for the iPhone 12 pro max with cash all at once, you are out $1200.
$1200 divided by $2000 equals 60% of your monthly income for one month.
Whereas, if you opt for the monthly installments, it’s $50 divided by $2000, for only 2.5% of your monthly income for 24 months.
Here’s the kicker!
Incomes generally go up.
Let’s say after 12 months, you get a raise, or a Christmas bonus, etc.
And let’s say instead of bringing home $2000 a month, you start bringing home $2500 a month.
Now, $50 in monthly installments divided by $2500 in income equals 2% of your monthly income.
So the percentage cost of the iPhone 12 pro max went down from 2.5% to 2% of your month income!
You wouldn’t be taking advantage of that income difference if you had paid for the iPhone 12 pro max with cash all at once.
Reason #2: You can invest majority of that money and grow the dividends
Let’s say you’re not struggling financially and you can make ends meet, you’re upper middle class, and you JUST. REALLY. WANT. THAT. iPHONE.
Let’s assume you can easily make that $50 a month installment payment.
Opt to make the dividends reinvest back into the stock, so your money grows, which gives you more money, which grows again.
You’ve essentially made that money your beeyatch, who will now work for you 24/7 to generate dividends/income for your future.
Yes, I’m kind of blowing this out of proportion because technically you’ll need something like $1.2 million in stocks or mutual funds before you can actually reach some level of comfort.
Let’s not kid ourselves with thinking that $1200 in stocks is going to give you any substantial returns in the short term.
But hey, it’s the thought that counts.
Because you can analyze other areas of your life where you can use this concept to make money as well.
Reason #3: Your cash flow is freed up
Let’s say you don’t invest that money or do anything with it, and you still opt for the $50 a month installments.
You’ve freed up your cash flow, even if you just put that $1150 away into a savings account in case of emergencies.
So come next month, that other $50 is there for you to pay the installment.
Plus, if you use online banks like Ally, they pay a higher savings interest rate than most banks like Wells Fargo or Chase.
So technically you could be earning a little bit of interest each month while the bulk of that money is sitting there, waiting to be used up for the 24 month installments.
Having freed up cash flow is really important if you’re the type that’s prone to accidents, natural disasters, or are an overall worry-wort about money, the economy, presidential elections, etc., and just want to have cash on hand for whatever life throws at you.
Secret 4th reason: you get 3% cash back with apple card
Try doing THAT with cash.
If you pay for the iPhone 12 pro max with the 24 month installments, Apple gives you 3% cash back RIGHT AWAY.
3% cash back on $1200 is $36.
Which you could invest in fractional shares of Apple to get dividends toward your future comfortable lifestyle.
After seeing these 3 perfectly good and valid reasons, it doesn’t make much sense to pay for the iPhone 12 pro max with cash right away, even if the money guru & anti-debt proponent, Dave Ramsey, advocates paying for everything with cash so you’re never in debt.
Do you see holes in these 3 reasons?
How are you going to be paying for your iPhone 12 pro max?
Let me know in the comments section below!
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For another similar article on this topic, this one regarding the iPad Pro, read: Here’s The Math Why It Makes More Sense To Use Apple Card’s Interest Free Installment Payments For New Tech Versus Paying In One Go