How to pay for your iPhone X

It’s that time of the year again! All the Apple fanboys (myself included) will be hitting refresh at midnight for the chance to be the first customer with Apple’s shiny new toy.

There are a bunch of different options for buying an iPhone these days. Here’s my plan and how I arrived at this decision.

Total cost of ownership

First, lets look at the cost of total cost of ownership of owning an iPhone X 64GB for 12 months. (I’m assuming you upgrade your phone every year otherwise you wouldn’t be reading this blog post).

  1. Apple’s iPhone Upgrade Program
    The program is pretty cool. You pay a monthly fee for your phone, it includes AppleCare, and after 12 months you can swap for a new phone. If you don’t swap it, after 24 payments you own the phone. Cost: $50/month + tax. Total = $660.
  2. Full price with AppleCare
    Another option is to buy the phone with AppleCare and pay the entire price up front. After 12 months you can sell it when you upgrade. I estimated the resale value based on current used iPhone prices (-30%). Cost: $1000 (phone) + $200 (AppleCare) + tax – $700 (resale value). Total = $620.
  3. Full price without AppleCare
    I don’t think AppleCare is a good deal (more on that in a second). If you buy the phone without AppleCare, and then sell it when you upgrade, it’s a lot cheaper. Cost: $1000 (phone) + tax – $700 (resale value). Total = $400.

If you want AppleCare, buy via Apple’s program

While you might be able to save about $40 by buying the phone outright and then reselling it after a year, that’s a hassle! If you go through Apple’s program, you can just walk into an Apple store in 12 months and get the newest and greatest.

You also get more optionality: if the resale price of the phone is higher than your remaining payments, you can still choose to pay it off and resell the phone (or give it to someone else). There’s no downside here since the 24 payments you would make to the Apple Upgrade Program total the same as buying the phone with AppleCare upfront.

Is AppleCare worth it?


AppleCare has an upfront cost and also a deductible for each repair. All repair pricing for the X hasn’t yet been released (which I think is bullshit on Apple’s part since the phone goes on sale tonight), but my guesses are: AppleCare costs $200, deductible for a screen repair is $29, screen repair without AppleCare is $200 (it’s $169 for the 8 Plus).

Lets look at the various scenarios here for broken screens (the most common iPhone issue):

With AppleCare Without AppleCare
No issues $200 $0
Broken screen (1 time) $229 $200
Broken screen (2 times) $258 $400

In most real world scenarios, I’m better off NOT buying AppleCare. I only save money in the scenarios where I break my screen TWO times within 12 months. And even then I’m not saving a ton.

But I want some protection on this expensive purchase!

This is not a cheap phone and not having protection against damage can be scary. Here’s how you get the protection you need for free.

  1. Pay for the phone using a credit card that offers theft and damage protection. Most cards like the Chase Sapphire Reserve and American Express will give you 90 days of protection. I’m going to use the Citi Prestige card because it gives you 120 days! That means for the first 4 months (1/3 of the time I’ll own this phone), I have 100% coverage on any issues. There’s no deductible.
  2. Pay your cell phone bill with the new Uber credit card that was released this week. As part of the standard benefits of this no-fee card, you get $600 protection against cell phone theft or damage. There’s a $25 deductible.

This coverage is actually better than AppleCare because you are protected for any kind of damage, theft, and even accidental loss!


Competition among credit cards has been really great for consumers. Taking advantage of the various insurance benefits cards offer means you can save money on purchases like iPhones by utilizing their protection and skipping AppleCare or other third party warranties.

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