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