Apple extends monthly payments to almost everything


“But as you know, having map access, at least in the US, gives us more degrees of freedom, and it doesn’t use up our balance sheet,” Apple (AAPL 1.15%) CEO Tim Cook said on the latest earnings call. “But we play a key role in choosing the type of programs associated with the card.”

The CEO was responding to an analyst’s question about using Apple’s balance sheet to come up with financing plans for more products following the launch of a new one. iPhone financing plan in December. Cook said the company is “working on doing this for other products as well.”

The Apple Card is issued by Goldman Sachs. Image source: Apple.

Installment plans for everything

This week, Apple introduced new funding plans for other devices, including Macs, iPads, and even lower-cost accessories like AirPods, in line with Cook’s comments, along with a recent report from Bloomberg indicating that such a decision was imminent. You can even finance Apple Pencil keyboards or styluses via Apple Card.

Monthly installment plans allow customers to spread the cost of new hardware purchases interest-free for varying terms ranging from six months to two years. Installment plans are a proven way to make large purchases more affordable, driving demand.

As Apple has slowly raised prices across the board in recent years — the new Mac Pro can be set to cost upwards of $50,000, for example — the installment plans will offer consumers considerable flexibility.

In addition, Apple still offers its co-branded credit card issued by Barclays, which also offers a promotion for interest-free financing for up to 18 months, depending on the size of the purchase. Just like Apple Card, which is issued by Goldman Sachsthe Barclays map also does not use Apple’s balance sheet.

There is no Bank of Apple

Apple has never used its own balance sheet to provide financial support for any of these types of programs, despite the fact that Cupertino tech giant sits on $193 billion in cash. Even the iPhone Upgrade Program, launched nearly five years ago, is backed by Citizen Financial.

This approach to outsourcing these underlying credit operations has several key advantages. For starters, Apple is able to recognize associated revenue immediately instead of having to defer revenue recognition. On top of that, the company doesn’t have to take on credit risk or deal with the hassles of running a financial institution, like estimating loan losses or maintaining regulatory reserves, among others.

Apple is not a bank and has no interest in becoming one. (Well, unless he’s trying to arm a supplier.)

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