Apple Pay has been around for years as a seamless way to pay for purchases on Apple devices from websites, apps, or physical stores. There’s now a feature for splitting any purchase across multiple payments: Apple Pay Later.
Apple Pay Later is a new feature that allows any purchase made through Apple Pay — not just purchases from Apple — to be split into four payments spread over six weeks. You have to apply for access (which does a “soft pull” on your credit score), with loans ranging from $50 to $1,000, which can then be used towards anything that supports Apple Pay. It works on iPhones with iOS 16.4 or iPads with iPadOS 16.4, and both of those updates started rolling out yesterday.
The service is being run by Apple Financing, a subsidiary of Apple, with the actual purchases running through the Mastercard Installments program operated by Goldman Sachs. Apple says “users’ transaction and loan history are never shared or sold to third parties for marketing or advertising,” but Apple Financing will start reporting loans to U.S. credit bureaus starting this fall, so they will be reflected in the financial information that keep getting hacked. Apple didn’t mention how late fees work.
You should be extremely careful when using Apple Pay Later, Zip payments in Microsoft Edge, and similar “buy now, pay later” (BNPL) services. They are designed to incentivize purchases that you cannot normally afford, and managing payment schedules for multiple purchases on top of your normal bills can be difficult. A survey by DebtHammer in 2022 reported that 22% of people who made purchases with BNPL services later regrated the decision, and 30% said they had to skip other bills to make the payments. CreditKarma conducted a similar survey in 2021, reporting that 34% of the surveyed group fell behind on one or more payments, and 72% of that group believe that it negatively affected their credit score.
Even though they may seem useful, and a little bit tempting, it’s usually best to avoid services like Apple Pay Later entirely. It’s hard enough to stay on top of finances, and adding more debt only makes it harder.
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