The Shift From Credit Cards to Installment Payments
The way Americans pay for smartphones has changed dramatically over the past few years. A Federal Reserve Bank of Richmond report noted that buy now pay later loans originated by the five largest lenders in the U.S. jumped from 16.8 million in 2019 to 180 million in 2021, with total loan values climbing from $2 billion to $24.2 billion. A New York Fed survey from 2023 found that about 20 percent of consumers had used BNPL at least once.
Part of that growth comes from smartphone buyers specifically. Flagship devices now regularly cross the $1,000 threshold, and carriers have pushed installment agreements for years. What BNPL adds is flexibility without a long-term service contract. Services like Klarna, Affirm, Afterpay, Sezzle, and Zip now appear at checkout on major retailer sites, letting shoppers split a phone purchase into four interest-free payments over six to eight weeks. Meanwhile, Apple and Samsung have built their own financing layers, and carriers like AT&T, Verizon, and T-Mobile offer 36-month agreements at 0% APR.
The appeal is straightforward: no full-price payment today, no hard credit check in many cases, and no compounding interest if you stick to the schedule.
Comparing the Main Ways to Buy Now, Pay Later for a Phone
| Option | How It Works | Typical Terms | Best For | Upsides | Watch Out For |
|---|
| Klarna / Affirm / Afterpay | Split checkout into 4 equal payments every 2 weeks | 6–8 weeks, interest-free | Quick upgrades without a service contract | Instant approval, no hard credit pull for many plans | Late fees; missed payments can affect future eligibility |
| Sezzle / Zip | Pay in 4 via virtual card at thousands of stores | 4 payments over 6 weeks | Shopping at smaller retailers | No hard credit check, works with debit cards | Fees for rescheduling or late payments |
| Carrier installment plans (AT&T, Verizon, T-Mobile) | Device cost spread over 24–36 months on your wireless bill | 0% APR, but tied to service agreement | Anyone who already pays a monthly carrier bill | No interest; trade-in credits can lower monthly cost | Device balance due if you cancel service; bill credits stop |
| Apple Card Monthly Installments | 0% APR financing through Apple Card | 12–24 months depending on device | Apple ecosystem users | 3% Daily Cash up front; no fees | Requires Apple Card approval |
| Samsung Financing / Lease-to-Own | Store-brand credit line or lease option | Up to 48 months financing, or lease terms | Samsung shoppers who want long terms | $0 down options; lease has no credit requirement | Financing requires credit approval; lease means you don't own it until paid |
| Carrier deals deserve a closer look. AT&T currently advertises promotions like an iPhone 17 for $0 with an eligible trade-in, applying up to $930 in credits over 36 months after purchasing on an installment agreement. T-Mobile and Verizon run similar structures, with Apple noting carrier trade-in credits up to $1,200 on newer iPhones. The catch is that those credits land on your bill month by month, and if you cancel service early, the remaining device balance becomes due. | | | | | |
How Buy Now Pay Later Works at Checkout
Using BNPL for a phone is simpler than most people expect. At participating retailers, you select the option at checkout, enter a few personal details, and receive an approval decision on the spot. Many services let you pay with a debit card or bank account rather than a credit card. Sezzle, for instance, generates a single-use virtual card number that you enter like any other card, and your purchase automatically splits into four interest-free payments over six weeks.
Apple has folded this into its own ecosystem. When you check out with Apple Pay on an iPhone or iPad, you may see a "Pay Later" hint under your card, letting you tap into installment offers from your bank or from providers like Affirm and Klarna. Apple Card holders can choose Apple Card Monthly Installments, which spread an iPhone purchase over 24 months at 0% APR with 3% Daily Cash returned up front.
Samsung takes a different approach by offering multiple paths on its own site: a traditional financing line with terms up to 48 months, a lease-to-own option that requires no credit check, and Pay in 4 plans through Klarna or Affirm.
The Costs and Risks That Deserve Attention
The "no interest" promise is real, but it comes with conditions. Late payments can trigger fees, and providers may pass unpaid balances to collection agencies as a last resort. Klarna states clearly that not paying on time could affect your ability to use the service in the future. That matters more than many shoppers realize, because BNPL usage can influence your credit profile even when the initial check is soft.
Another consideration is budgeting discipline. Splitting $1,200 into four $300 payments is easier to absorb than one large charge, but the total cost is still $1,200. The Richmond Fed's analysis points out that BNPL shares similarities with credit cards and layaway in this respect, and consumers who juggle multiple BNPL plans across different retailers can underestimate their total obligations.
Carrier installment plans carry a different risk. The 0% APR looks attractive, but the device is tied to your service agreement. If you switch carriers or cancel service, the full device balance typically becomes due immediately, and promotional credits stop. Reading the terms before signing matters, especially for deals that advertise "$0 down" or "free after credits."
Steps to Choose the Right Payment Plan
Start by deciding what matters most: keeping your carrier, owning the phone outright, or minimizing monthly cash flow. Then work through these steps.
First, check your current carrier's installment terms. If you already pay a monthly bill with AT&T, Verizon, or T-Mobile, a 36-month plan at 0% APR may be the cheapest path, especially with a trade-in. Compare the monthly device payment against what you would pay with a BNPL split.
Second, compare the BNPL services available at the retailer you plan to use. Klarna and Affirm both appear at Apple checkout and on Samsung's site, while Sezzle and Zip are useful at smaller retailers that accept their virtual cards. Approval decisions are instant, and checking eligibility generally does not affect your credit score.
Third, factor in trade-in value. Apple, Samsung, and the carriers all run trade-in programs that reduce the amount you finance. A recent iPhone model can knock hundreds of dollars off the purchase price, and the remaining balance then becomes smaller and easier to split.
Fourth, read the fine print on late fees and rescheduling policies. Each service has its own rules, and the differences matter if your payment schedule slips. Sezzle and Zip allow some flexibility, while others may charge a fee or restrict future use after a missed payment.
Fifth, set a repayment reminder. BNPL plans run on short timelines, and a missed payment can cost more than just a fee. Calendar alerts, autopay, or the provider's own reminder emails can keep you on track.
Making the Call That Fits Your Budget
Buy now pay later has genuinely expanded how Americans buy smartphones, and for the right buyer it can be a smart tool. Splitting a purchase into interest-free payments works well when you have a steady income, a clear repayment plan, and the discipline to stick to the schedule. Carrier installment plans offer a different kind of flexibility, spreading cost across years rather than weeks, with trade-in credits sweetening the deal.
The key is matching the payment structure to your situation, not just to the marketing. A four-payment BNPL plan suits someone who can comfortably cover the balance within two months. A 36-month carrier agreement suits someone who plans to stay with the same network and wants the lowest possible monthly payment. An Apple Card plan or Samsung financing line suits someone who prefers working directly with the manufacturer.
Take a few minutes to run the numbers before you upgrade. Check what your carrier offers, see which BNPL services appear at checkout on your preferred store, and factor in trade-in value for your current device. The right plan is the one that gets you a new phone without turning the purchase into a financial headache.
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