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Reaping Your Rewards

Bad credit customers pay more for Apple iPhones

Summary

Consumers wanting the iPhone must submit to credit checks and may be required to pay up to $1,000 security deposit if credit’s no good.

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For consumers with bad credit, a combination of excitement and $200 alone may not be enough to guarantee purchase of the new, lower-priced 3G iPhone — which went on sale July 11. That’s because a bad credit history could more than double your out-of-pocket expenses on the latest Apple product.

As with the earlier version, in order to activate the 3G iPhone you will need to complete a credit check for AT&T service. Consumers who are found to have bad credit will be required to pay an additional amount in a security deposit in order to qualify for the service plan. AT&T does not publish its rate card, but the most-common amount reported by bad credit customers is $250 per line. Several consumers have reported to CreditCards.com and on the AT&T online forum they were asked for or charged $750, and some reports say the maximum is $1,000 per line.

The credit approval can occur either in-store, by phone or later at home. Activation delays can occur if any questions come up regarding your account status or credit quality.

The Apple iPhone does not work right out of the box, but needs to be activated first. When activating your iPhone from home, you will use iTunes on your PC or Mac. Also needed are a credit card or debit card, Internet access and an e-mail address.

But before rushing home to activate and use their brand-new iPhone, prospective owners who complete a preapproved credit check in-store can help ensure they will not be required to make a return visit or additional phone call to provide a deposit for their iPhone.

Meanwhile, the at-home credit approval takes place alongside the iPhone activation via your home computer.

In either case, should your credit check reveal credit that is less-than-stellar, you may be required to pay a security deposit. That significantly bumps up the price tag on both the 8-gigabyte iPhone, which will retail for $199, and the 16-gigabyte version, which will sell for $299. The original iPhone had a starting price of $399.

Therefore, should buyers return home, then have the credit check reveal bad credit, they will be unable to complete their iTunes activation process unless they return to the store or call AT&T. By completing a credit check in store or via an AT&T sales representative ahead of time, iPhone buyers can speed up the iTunes activation process that takes place later. Another reason to do the credit check in-store: A buyer who gets the credit check later, finds the deposit too steep and wants to return the phone faces a 10 percent restocking fee.

If bad credit does result in payment of a deposit on your iPhone, you can still take comfort in the fact that 12 consecutive months of good payment history will result in the full refund of your security deposit.

See related:Help for bad credit

What’s up next?

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Published: May 25, 2007

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