How the Citizens One iPhone loan works

Written by: Anna Baluch
• Updated •5 min read
This date may not reflect recent changes in individual terms.
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In a Nutshell

The Citizens One iPhone loan can help you trade in your old phone for the latest iPhone and spread out the remaining payments over 24 months. But it could also end up costing you in interest, affecting your credit scores and putting you in a cycle of debt.
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If you like having the latest iPhone but don’t have the cash to cover its entire cost upfront, you may be thinking about financing your purchase with the Citizens One iPhone loan.

Apple’s iPhone Upgrade Program offers members a way to get the new iPhone every year through financing. That means you won’t have to finance your phone’s purchase through your mobile carrier. So if you want to stretch out your payments beyond what your mobile carrier offers, you can apply for this personal installment loan through Citizens One, which is the brand name for Citizens Bank’s lending business.

But Citizens One will perform a credit check if you apply, and you’ll need a credit or debit card on file — which is required when you become a member of Apple’s iPhone Upgrade Program — to make monthly payments.

What is Apple’s iPhone Upgrade Program?

If you become a member of Apple’s iPhone Upgrade Program, you can apply to finance the full cost of your iPhone and AppleCare+ coverage through a 24-month installment loan from Citizens Bank that comes with a 0% APR. If approved, you can buy your phone directly through Apple, and you won’t have to finance it through your mobile carrier, with Citizens One providing the financing for Apple.

Here are some factors to consider before you apply.

Benefits of the iPhone Upgrade Program

  • Spreads out your costs — Without a trade-in, the latest top-of-the-line iPhone can cost more than $1,000 before taxes and fees. If you don’t have that kind of money lying around and still want the latest and greatest, you can spread out your payments over 24 months.
  • Allows trade-ins of your old phone — You can trade in your previous iPhone to help offset the total cost of the new phone and lower your monthly payments. But if you’re signing up for the first time, remember that not all devices are eligible.
  • Backed by AppleCare+ — AppleCare+ is an insurance policy that covers hardware repairs, software support and two cases of accidental damage to give you some peace of mind.
  • Works with major mobile carriers — If you have a monthly rate plan with AT&T, Sprint, T-Mobile or Verizon, you can stick with your current plan or switch your plan between carriers and Apple will connect your iPhone for you.

What to watch out for

  • You may end up paying interest — Even though this Citizens One loan comes with 0% interest, that doesn’t necessarily mean you won’t pay interest on the loan. You’ll make your monthly payments on a credit or debit card tied to your account when you sign up for the iPhone Upgrade Program account, but if you use a credit card you might have to pay interest on that account if you don’t pay off your balance in full each month. So when you sign up, it might be a good idea to link a debit card to your account rather than a credit card.
  • Citizens One checks your credit — A credit check is required to apply for the Apple Upgrade Program, so if you don’t have the best credit, you might not be approved.
  • AppleCare+ is required — To enroll, you have to buy the AppleCare+ insurance policy. While you may like this extra protection, it could increase the total cost of the phone. You’ll also want to double check that you aren’t double paying for phone insurance through your carrier.

When can I upgrade my iPhone with a Citizens One loan?

After entering Apple’s iPhone Upgrade Program, you can’t just upgrade your phone whenever you want. There are certain requirements you must meet before you’re eligible for an upgrade.

  • You’ve made at least 12 of your 24 monthly payments.
  • Your Citizens One account is in good standing as outlined under your loan terms.
  • You’ve maintained the AppleCare+ plan with your financed phone.
  • Your iPhone is in good physical and operational condition under Apple’s standards.
  • Any repair or replacement of the financed phone was done at an Apple Store, through an authorized Apple service provider or covered under the AppleCare+ through the Theft and Loss plan.

There’s an early upgrade option available as well. After you’ve made six payments toward your Citizens One loan, you can accelerate your payments and become eligible for an early upgrade if you pay the equivalent of 12 installment payments.

If you can meet the requirements to upgrade your iPhone, you can apply for a new 24-month installment loan plan. Just keep in mind that when you upgrade through the program, you put yourself in a cycle where you’re continuously paying for a new phone.

Will a Citizens One loan affect my credit scores?

Possibly. As mentioned earlier, Citizens Bank will check your credit when you apply for the Citizens One iPhone loan. This check — known as a hard inquiry — is common with personal loan applications and may lower your scores by a few points, or the impact may be negligible. Still, it’s good to keep in mind that you might see some change to your credit scores, especially if you are applying for multiple loans at the same time.

Should I get a Citizens One loan for my iPhone?

If having the newest iPhone for work or personal use is important to you and you don’t have the money to pay for it upfront each time, you may want to consider applying for a Citizens iPhone loan.

But if you’re content with having an older iPhone model, want to avoid a new monthly expense or don’t like the idea of being continually in debt by upgrading every time you can, you should probably avoid the iPhone Upgrade Program.

Next steps

Before you apply for Apple’s iPhone Upgrade Program, do your research. Consider how much you want or need every new iPhone that hits the market — this way, you can make a decision that’s right for you.

Make sure you can afford the monthly payments that will come with your new iPhone by reviewing your budget, too.

If you decide that the Apple iPhone Upgrade Program makes sense for you, you can apply online, in an Apple Store or through the Apple Store app.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

About the author: Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA in marketing from Roosevelt Un… Read more.