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For the first time, a carrier is selling expensive phones and tablets with zero-percent interest to customers with terrible credit.

Shoppers still have to qualify by having paid a year’s worth of T-Mobile bills on time. The policy is retroactive, however, so existing T-Mobile customers with good track records can get a new iPhone or Samsung Galaxy Note 4 with nothing down and zero-interest monthly payments of $27.08 and $31.24, respectively. Previously, such an offer was available only to customers with excellent credit. The latest smartphones were simply not offered to other customers, unless they paid in full or a large portion upfront.

This is a big deal. As GigaOm reports, 63 percent of Americans have less than excellent credit. Making the latest smartphones available to those people seems like a win-win. T-Mobile attracts more customers, and those customers get to take advantage of the company’s generous financing.

There’s a pretty big catch worth considering, however. T-Mobile doesn’t do contracts. That means you’re free to leave at any time, without paying the $350 “early termination fee” that the likes of Verizon charge. But if you decide to leave, and you owe $500 or so on an iPhone, you’ll be expected to pay. That is a de facto early termination fee. Also, smartphones are useless without data, and T-Mobile’s cheapest postpaid data plan is $45, bringing the total monthly payment to $72 for an iPhone, not including taxes and fees. One could argue that T-Mobile is suckering customers into buying phones they don’t need and can’t afford. This blogger humbly disagrees. It’s arrogant to assume poor people, even those with bad credit, can’t manage their finances. Remember, bad credit is now the norm. Everyone should have access to the same special offers. Good on T-Mobile for figuring out a way to do it without involving the credit ratings agencies, which, by the way, are completely impossible to deal with.

— Posted by Peter Z. Scheer

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