Carriers are all about selling customers on upgrading their phones and spending big on the latest and greatest device - with big operators launching their financing options to enable users to pay off high-priced handsets over time.
So it's no surprise that manufacturers themselves are starting to dip their toe in the finance pool, with Motorola announcing it will be offering a Motorola Credit Account to customers who would rather buy now, pay later.
The Motorola finance offer is backed by Comenity Capital Bank and, unlike the financing offered by carriers such as T-Mobile, seems to operate in a similar way to a credit card.
If you buy a Motorola product under its new financing agreement, you pay $0 down and zero interest during the promotional period (which, depending on the price of what you buy, will be either 6, 12 or 18 months). Minimum monthly payments start at $25 for all plans.
But if you fail to pay off the balance owed during this time frame, interest will be charged from the purchase date – at a not-so-convenient standard variable rate of APR 28.99%.
The length of the credit plan varies according to the cost of your Motorola device. To extend the promotional interest-free period over 18 months, customers will need to spend a minimum of $549.
The fine print
There’s no annual fee to sign up, and with no other upfront costs, it might seem like a great way to buy your next smartphone. But, unsurprisingly, read the fine print and it’s a different story.
Fail to make a monthly payment on time, and you’ll also be hit with annual 28.99% interest charges. For some perspective, most American credit cards come with an annual interest rate of between 12% and 23%.
Despite promises of ‘Instant Motorola money!’, there are better ways to finance your next big tech purchase.
If you’re looking to avoid being tied to a carrier on a two-year contract, but don’t have the ready cash to buy a device upfront, we can see how this kind of financing might appeal.
But unless you’re the dependable type who never misses a payment and will pay off your handset before the interest-free period expires, you’d be better off looking into a carrier plan such as T-Mobile’s Equipment Installment offer.
The Motorola Credit Account is available to approved US residents only who are 18 years and over. For more info, head to Motorola’s site here.
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