How to Finance a Next-Gen Gaming Console

Today is game day with my little champ

Every time a new generation of gaming consoles comes out, gamers get to enjoy new games, better features and a leap in performance over last gen. But these consoles come with a hefty price tag—one that poses a challenge for gamers on a budget.

Fortunately, there are financing options available for next-generation consoles from Microsoft and Sony. Here's everything you need to know.

How Does Financing Work for Xbox All Access?

Xbox Access is a subscription service that Microsoft launched in 2018. The program allows gamers to pay for an Xbox console over time instead of paying upfront. In addition to the console, you'll also gain access to Xbox Game Pass Ultimate, which includes a library of 100 games, the ability to play games online via Xbox Live and more. Game Pass Ultimate usually costs $14.99 per month on its own.

With the Xbox Series X ($499) and lower-spec Xbox Series S ($299) coming on November 10, you can pre-order the console or wait until launch and join Xbox All Access through Microsoft, Best Buy, Walmart, Target or GameStop. There are three tiers for the program:

  • For $34.99 per month over 24 months, you'll receive the Xbox Series X and two years of Xbox Game Pass Ultimate. Total cost: $839.76
  • For $24.99 per month over 24 months, you'll receive the Xbox Series S and two years of Xbox Game Pass Ultimate. Total cost: $599.76
  • For $22.99 per month over 24 months, you'll receive the previous-gen Xbox One S, two years of Xbox Game Pass Ultimate and the option to upgrade to an Xbox Series X after 18 months. Total cost: $551.76

There are no upfront costs for Xbox All Access financing. Note that there's no option to finance just the console, so if you want the console but not Xbox Game Pass Ultimate, you'll need to find another financing option.

How Financing for Xbox All Access Affects Your Credit

The financing comes in the form of a line of credit from lender Citizens One, not Microsoft. Citizens One will run a hard inquiry on your credit report to determine if you qualify for the 0% APR financing.

Usually, a line of credit works similarly to a credit card in that you can borrow up to the limit on the account, pay it off and borrow again. In this case, however, there's no indication that you'll be able to access the line of credit beyond what you need to pay for your Xbox All Access subscription.

Citizens One doesn't disclose a minimum credit score requirement to qualify. Generally, with lines of credit and 0% APR financing, the higher your credit score, the better your chances will be to qualify. The lender also doesn't indicate whether it reports your on-time payments to the three national credit bureaus, but it may report late payments.

Does PS5 Offer Financing Options?

Sony doesn't provide a financing option for its PlayStation 5 console that'll launch in the U.S. on November 12 and cost $499 ($399 for the Digital Edition, which lacks a disc drive). However, GameStop has announced that it will offer several ways to purchase the PS5, including layaway payments, a rent-to-own plan and installment payments through third-party companies—the last option is similar to Microsoft's arrangement with Citizens One.

Why a Credit Card Might Be a Better Option for Your Next Gaming Console

While there will be options available to finance your next-gen console purchase through a retailer or a third-party lender, using a credit card may be a solid alternative.

Many credit cards offer introductory 0% APR promotions that allow you to make a purchase and pay it off over time. You may also get a welcome offer (sometimes called an intro bonus), which could save you money on the cost of the new console. Consider the following cards:

Capital One Quicksilver Cash Rewards Credit Card: The card offers an intro 0% APR on purchases for 15 months, plus a welcome bonus of $200 after you spend $500 in the first 3 months. Once the 0% APR period ends, the card's ongoing rate climbs to a variable APR of 15.24% to 25.24%.

To give you an idea of how much you can save, let's say you open a new Capital One Quicksilver Cash Rewards Credit Card account and charge $500 to purchase an Xbox Series X (again ignoring taxes). You'd get $200 back, which reduces your net cost to $350. Then, if you make no other purchases and pay $25 per month—the minimum payment as of October 2020—you'd pay off the balance within 14 months with no interest. Also consider the cost of taxes, accessories and games when planning your payments, since those extra costs can change your payoff strategy. Use a credit card payoff calculator to make sure you can pay in full by the time interest kicks in.

To contrast, let's take a look at what you'd pay if you used one of your current credit cards to make the $500 purchase. With a 16% APR (near the national average) and a 15-month repayment period, you'd have a $37 monthly payment, and pay $54 in interest. Factoring in taxes and other costs, your payment would be even higher.

Check Your Credit Before Applying

Just about any type of financing you might pursue to help you purchase your next-gen console will require a credit check, and if your credit score isn't in good shape, you may have a hard time getting approved.

So, before you apply for financing or a credit card, check your credit score to see where you stand. If it needs some work, check the risk factors that accompany your credit score to get an idea of the areas you can make improvements, then take steps to build a positive credit history. This process can take time, but there are some ways to improve your credit score fast.

Once you secure financing, be sure to make all payments on time and keep your credit utilization low (if you're financing with a credit card) to make sure you don't do any harm to your credit. Credit cards and other financing options can be a great way to pay off a console over time, but be sure you're only exploring these options if you're confident you can pay off the purchase in full.

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through December 31, 2022 at AnnualCreditReport.