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Payments for multiple products using Installments

An Apple 2-year installment plan for the iPhone sounds good until you buy another one or two (or more) Apple products on installments and you want to pay one item off early. 


For example, if you purchased a Watch and an iPhone on installments, let’s say you only have $200 to pay on the watch, but $950 to pay on the iphone. Naturally you want to keep the 2-year payment plan for the iPhone because that is easy to maintain financially so you decide to pay the watch off early.


Process 1

You go to your Apple card on your iphone and click on the three dots, next to the credit card icon and then select “Monthly Installments”. This will take you any active (still showing a balance) products, in this case the phone and the watch. 


To see the balance on each product click the appropriate line item. Let’s say we click on the Watch. This Watch page shows what you financed, what you paid and what remains to be paid. Just below the amount you financed there is a “Pay Early” link. Perfect you think and click the link. A message appears, informing you that “...you will need to pay off your total Apple card balance before additional payments can be applied to your installments balance”. For simplicity, let’s assume you have no other charges on your card, just your installments. You click “Continue”. 


The next screen shows an amount equal to the total of the remaining installment amounts to to be paid on your two installments. In this example, that would be $200 + $950 = $1,150.


You only want to pay off the Watch so you ignore the “Pay $1,150 and select “Other amount” at the bottom of the screen.


You enter $200 on on the next screen thinking this will pay off the watch, but no, Goldman Sachs allocates $100 to the watch and $100 to the phone.


There is now a $100 balance on the watch and an $850 balance on the watch. You decide to pay another $200 payment to finish paying for the Watch. This DOES pay off the remaing balance on the watch but it also reduces the balance on your iPhone to $750 which reduces the number of payments to less than 24 which is NOT what you intended to do. Also, your personal cash flow is impacted.


So, in order to pay off the watch you have to pay double what you owed on the watch which results in a reduced payment schedule on your phone.


The Goldman Sachs (GS) help desk confirmed that despite the product screen offer to “pay early” for that product, the payment is actually applied to the total outstanding installments balance, NOT the watch alone.


Process 2.

I did hear another explanation from another GS rep who said that the payment would be taken off the FIRST product that you purchased on installments but when I get my next bill I’ll test to see which of these two processes is actually right. Neither of them are acceptable. I should be able to select which product to pay off without impacting the other product’s balance or installment schedule.


In my ACTUAL situation, my 2-year phone installment plan would be reduced to 8 months under Process 1 above and I would have to spend $566.50 to pay off my watch that has a balance of $283.25 to pay. The user interface is misleading in that the context for the “pay early” is a single product, not both.


In conclusion, I may have to choose not to buy more than one product on installments using the Apple card and buy the other one outright or from another supplier like Amazon or Costco instead. Not a very elegant solution. How do others handle this situation?

iPhone 16 Pro, iOS 18

Posted on Nov 1, 2024 8:56 PM

Reply
2 replies

Nov 2, 2024 5:30 AM in response to pughimag2

Your logic and Goldman Sachs have different goals. Goldmans aim is to reduce your chances of paying any interest. They do this by requiring that any extra payment be applied to balances that are being charged interest. Paying off an interest free loan ahead of balances being charged interest makes no sense and is not in the account owner’s best interest.


Applying any extra payments to the oldest installment uses the first in first out principle. This also reduces time the account owner is in debt.


I’m not sure of the reasoning behind wanting to pay off the smaller amount first. The amount is interest free. Personally I’d put the extra funds in an emergency fund such as a local High Interest Savings Account (HYSA).

Nov 2, 2024 6:56 AM in response to Jeff Donald

I appreciate your input Jeff and I don't entirely disagree with your comments and recommendations. It sounds like you know your way around financial management.


Goldman Sachs and I have the same goals, no interest and a small cash flow for any existing debt which I generally plan to zero out as fast as I am able without seriously impacting my available cash. Of course Apple installments incur no interest and get paid automatically.


As retirees, we are not interested in debt, even if it is no interest debt. I don't take debt on unless I can dispose of it relatively quickly. The Apple installment process helps me to do that. In the case of the iPhone, a 2-year monthly payment of $18/m is easily managed and can be paid off at any time although I plan to keep paying it until I decide I don't want to pay it anymore. No bigee. Essentially, the installment plan allows me to retrieve trade-in money right away and lets me decide when I want to get rid of the debt. I never pay interest. I don't buy anything on the Apple Card other than Apple products. Amazon gives us a 5% kickback when we buy from them.


The smaller amount has a higher monthly payment so that goes first. It has a 1-year term.


My emergency fund uses a laddered CD which has been paying me over 5% and is fully funded for our modest financial situation. I also use high interest checking and savings accounts that give me flexibility and fluidity. We also use tax-free Roth accounts for saving.


The overall goal is no debt and a cash flow that is easily managed. We find that this approach makes for a relatively stress-free retirement.


I'm not a financial wizard so our approach is probably a little anal but it has served us well. I have never paid interest on a credit card. I prefer to enjoy my hobbies, watch TED and enjoy life with my wife of 53 years. We like to stay fit and we enjoy good food (she is a fabulous cook), gardening and anything else that takes our fancy (like keeping up with Apple products and learning about AI).


I just wish Goldman Sachs would not make it so difficult to be selective when I want to pay off the Apple installment purchases. Take care.







Payments for multiple products using Installments

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