Apple just launched a new way to buy an iPhone in monthly payments, and it says a lot about its master plan for the Apple Card

• Apple's new iPhone installment plan for Apple Card holders says a lot about why it launched a credit card in the first place: to discourage you from leaving Apple's ecosystem.
• The plan, which Apple launched on December 10, lets Apple Card holders purchase an iPhone in 24-month installments with no interest or fees.
• It plays into Apple's broader strategy for the Apple Card, which is to make it easier to upgrade to each new iPhone - and harder to leave that ecosystem behind.
• That's as important as ever for Apple, as it has helped make up for slowing iPhone sales by finding new ways to monetize existing iPhone owners.
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Apple recently introduced a new payment plan that allows Apple Card holders to purchase an iPhone in 24 monthly installments without any interest. The new perk, which launched earlier this week on Tuesday, says a lot about why Apple launched a credit card in the first place - to incentivize you to remain loyal to Apple's products.

The Apple Card already does an excellent job at keeping you hooked into Apple's ecosystem of devices, making it more difficult to distance yourself from the iPhone and gravitate toward Android. After all, given that Apple Card is only available to iPhone owners, who wants to deal with the inconvenience of giving up a credit card just because they're buying a different type of phone?

Now, with its new installment plan, Apple is compelling iPhone devotees to not only hold on to their current device; it's simplifying the process of upgrading to a new one, too.

Apple previously allowed customers to buy an iPhone in monthly installments without interest through the iPhone Upgrade Program it offers in partnership with Citizen One bank. But customers may still face other types of fees from their credit card holder through that plan, such as fees related to late payments or unpaid balances, as noted in the plan's terms and conditions.

That's why Apple is positioning its new installment plan as being more convenient. The Apple Card doesn't charge any fees - not even penalties for late payments - and the installment is automatically added to the minimum balance on your card. The company is also offering 6% back on purchases from the Apple Store when you pay using your Apple Card.

It shows that Apple wants to own the whole experience from start to finish, from where you buy the iPhone to the card you use to pay for it.

Motivating users to stick with the iPhone is particularly important for Apple as the company's smartphone sales have been declining in recent quarters. Apple has managed to grow its overall revenue despite slowing iPhone sales thanks to healthy growth in other segments, like its burgeoning wearables and services divisions.

The company's wearables, home, and accessories division, which includes popular products like AirPods and the Apple Watch, grew to $6.5 billion, the company revealed in its fiscal fourth quarter earnings report. That makes it nearly as large as Apple's Mac business. Apple's services category also grew by 18% to $12.5 billion in the company's fiscal fourth quarter, helping Apple topple analysts' expectations.

Apple's most recent earnings results proved that the iPhone is more important than ever for Apple. Even though iPhone revenue isn't growing, the company is still managing to boost revenue by finding new ways to monetize existing iPhone users, such as by convincing them to sign up for a monthly $5 subscription to Apple Arcade or by encouraging them to purchase a pair of $250 AirPods Pro.

The Apple Card plays a big role in this endeavor by making it harder for current Apple smartphone users to ditch their iPhone, and easier for them to upgrade to a new one. The new iPhone installment plan is just another step in that direction.