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How to Finance a Next-Gen Gaming Console

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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.

Cash Back Credit Cards

Cash back credit cards offer the chance to earn cash rewards on every purchase you make. Many of them also provide intro 0% APR promotions, which can save you money on interest. Here are a couple of options to consider:

  • Discover it® Cash Back: The card offers 5% cash back on the first $1,500 you spend each quarter on rotating categories when you activate, and 1% back on all other purchases. Importantly for console buyers, those bonus categories for the fourth quarter of 2020 include Amazon.com, Target.com and Walmart.com. For new cardholders, Discover matches all the cash back you earn during the first year—doubling your potential savings. The card also comes with an intro 0% APR for 14 months on purchases and balance transfers, which then climbs to 11.99% to 22.99% variable APR.
  • Chase Freedom Unlimited®: This card offers an intro bonus and an intro 0% APR promotion. You'll earn a $200 bonus after you spend $500 in the first 3 months and 5% back on your first $12,000 spent at grocery stores during the first 12 months (though Target and Walmart don't count). You'll also get an intro 0% APR on purchases for 15 months, as well as rewards on your ongoing purchases. Once the promotional 0% interest period is over, your ongoing rate climbs to a variable 14.99% to 23.74% APR.

With a new Chase Freedom Unlimited®, for instance, if you spend $500 on the Xbox Series X (ignoring taxes), your net cost will come down to about $300 thanks to the card's $200 welcome offer, and that's not including the card's base cash back rewards rate of 1.5%.

More Credit Cards With Long 0% Intro APR Periods

The cash back credit cards we suggested offer intro 0% APR promotions, but there are more cards to choose from that may provide longer terms or various other benefits to make it worth your while. You might also consider these cards if you already have the cards above and are no longer eligible for the intro bonus.

With one of these offers, you can purchase the console after getting your card and have a set time to pay it back interest-free from the date you open your account. As long as you pay in full before the promotion ends, you'll avoid interest altogether. Here are some cards to compare:

  • Citi® Diamond Preferred® Card: With this card from our partner, you'll get an intro 0% APR on purchases and balance transfers for 18 months, more time than you'd get with most similar credit cards. This one doesn't offer rewards, but it may be worth it if you need more time to pay off the balance. This card's ongoing APR is a variable 14.74% to 24.74%. Balance transfers carry a 3% fee ($5 minimum).
  • 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. The bonus is as big as the one offered by the Chase Freedom Unlimited®, and can reduce your net cost significantly. Once the 0% APR period ends, the card's ongoing rate climbs to a variable APR of 15.49% to 25.49%.

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.